I
105TH CONGRESS
2D SESSION
H. R. 4745
To establish a program to assist homeowners experiencing unavoidable, tem-
porary difficulty making payments on mortgages insured under the Na-
tional Housing Act.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 8, 1998
Mr. GUTIERREZ introduced the following bill; which was referred to the
Committee on Banking and Financial Services
A BILL
To establish a program to assist homeowners experiencing
unavoidable, temporary difficulty making payments on
mortgages insured under the National Housing Act.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
The Act may be cited as the ‘‘Homeowners’ Emer-
gency Mortgage Assistance Act’’.
SEC. 2. MORTGAGE EMERGENCY ASSISTANCE PROGRAM.
(a) IN GENERAL.—The Secretary shall establish a
program to make payments on a mortgage insured under
the National Housing Act for a 1- to 4-family residence
when—
(1) the mortgagee has given the mortgagor no-
tice in accordance with section 3(b) that it intends
to foreclose the mortgage;
(2) at least 2 full monthly installments due on
the mortgage are unpaid after the application of any
partial payments that may have been accepted but
not yet applied to the mortgage account;
(3) the mortgagor is suffering financial hard-
ship due to circumstances beyond the mortgagor’s
control which render the mortgagor unable to cor-
rect the delinquency on the mortgage and unable to
make full mortgage payments before the expiration
of the 60-day period beginning on the date that no-
tice was sent to the mortgagor in accordance with
section 3(b);
(4) there is a reasonable prospect that the
mortgagor will be able to resume full mortgage pay-
ments not later than 36 months after the beginning
of the period for which assistance payments are pro-
vided and to pay the mortgage in full by its maturity
date or by a later date agreed upon by the mortga-
gee;
(5) the property mortgaged is the mortgagor’s
principal place of residence;
(6) the mortgagor does not own other property
which is subject to a mortgage insured or held by
the Secretary;
(7) the mortgagor has applied to the Secretary
for assistance in accordance with section 4; and
(8) the mortgagor has not been more than 60
days in arrears on a residential mortgage within the
2-year period preceding the delinquency for which
assistance is requested, unless the mortgagor can
demonstrate that the prior delinquency was the re-
sult of financial hardship due to circumstances be-
yond the control of the mortgagor.
(b) WAIVER OF CERTAIN CONDITIONS.—The condi-
tions set forth in paragraphs (4) and (5) of subsection
(a) may be waived by the Secretary in any case where re-
quiring the conditions to be met would adversely affect
achievement of the purposes of the National Housing Act.
(c) EFFECT
OF FINDING
OF INELIGIBILITY.—If,
after reviewing an application for assistance submitted in
accordance with section 4, the Secretary determines that
the mortgagor has not met the conditions of eligibility de-
scribed in subsection (a), the mortgagor shall be prohib-
ited from reapplying for assistance under this Act until
the expiration of the 6-month period beginning on the date
of such determination unless there is a material change
in the financial circumstances of the mortgagor.
(d) DETERMINATION
RELATING
TO
FINANCIAL
HARDSHIP.—In determining whether a financial hardship
is due to circumstances beyond a mortgagor’s control, the
Secretary may consider information regarding the mortga-
gor’s employment record, credit history, and current in-
come.
(e) HOUSING COUNSELING AGENCIES.—The Sec-
retary shall designate and approve nonprofit housing
counseling agencies in each State to be available to assist
the Secretary in implementing the program established
pursuant to subsection (a).
SEC. 3. LEGAL ACTION.
(a) CONDITIONS UNDER WHICH LEGAL ACTION IS
PROHIBITED.—Except as otherwise provided in the Act,
a mortgagee of a mortgage which is insured under the Na-
tional Housing Act for a 1- to 4-family residence may not
accelerate the maturity of or commence any legal action
regarding such a mortgage (including mortgage fore-
closure to recover under such obligation) or take posses-
sion of any security of the mortgagor for such mortgage
obligation—
(1) before the expiration of the 30-day period
beginning on the date that notice of the intent to
take such action was sent to the mortgagor in ac-
cordance with subsection (b);
(2) before the expiration of the 30-day period
beginning on the date of the initial meeting between
the mortgagor and an approved counseling agency
held in accordance with section 4(a);
(3) if an application for such assistance under
this Act has been submitted to the Secretary on be-
half of the mortgagor and such application—
(A) is pending; or
(B) has been approved by payments have
not yet been made toward the mortgage; or
(4) if payment toward the mortgage is being
made under this Act.
(b) REQUIREMENTS OF NOTICE.—Notice under this
section shall—
(1) give a brief description of the legal action
intended and the basis therefore;
(2) be sent via first class mail;
(3) include a list of approved counseling agen-
cies located in the State in which the mortgagor re-
sides; and
(4) be subject to such other requirements as
prescribed by the Secretary.
SEC. 4. APPLICATION FOR ASSISTANCE.
(a) MEETING.—
(1) IN
GENERAL.—To apply for assistance
under this Act, not later than 30 days after receiv-
ing notice in accordance with section 3(b), a mortga-
gor shall attend a meeting with the mortgagee or an
approved counseling agency to attempt to prevent
legal action for which the notice was sent by restruc-
turing the scheduled mortgage payment. A meeting
under this paragraph may be conducted over the
telephone.
(2) NOTICE.—If the mortgagor meets with the
approved counseling agency within the period speci-
fied in paragraph (1), the approved counseling agen-
cy shall send notice of the meeting, including the
date of the meeting, to the mortgagee not later than
5 business days after the meeting.
(b) PREPARATION; SUBMISSION.—
(1) IN GENERAL.—If it is determined at the
meeting that the mortgagor is not likely to be able
to pay the mortgage delinquency or otherwise resolve
the default and prevent foreclosure before the expi-
ration of the 60-day period beginning on the date of
the meeting, the mortgagor may file an application
for mortgage assistance under this Act. At the re-
quest of the mortgagor, an approved counseling
agency shall—
(A) assist the mortgagor in preparing an
application for assistance under this Act; and
(B) not later than 30 days after the mort-
gagor initially requests assistance in the prepa-
ration of the application, submit the completed
application to the Secretary.
(2) FEES.—The Secretary may pay approved
counseling agencies a fee, in an amount determined
by the Secretary, for rendering assistance pursuant
to this Act.
(c) NOTICE TO MORTGAGEE.—If the approved coun-
seling agency submits an application for assistance to the
Secretary on behalf of a mortgagor, the approved counsel-
ing agency shall, not later than 5 business days after sub-
mitting the application, inform the mortgagee of the date
that the application was submitted.
(d) FORM; CONTENTS.—An application for assistance
under this Act shall be submitted on a form prescribed
by the Secretary and shall include a financial statement
disclosing all assets and liabilities of the mortgagor,
SEC. 5. PAYMENTS.
(a) AMOUNT TO BRING MORTGAGE CURRENT.—If
the Secretary determines that a mortgagor is eligible for
assistance under this Act, the Secretary shall pay to the
mortgagee from the Mutual Mortgage Insurance Fund the
full amount due to the mortgagee pursuant to the terms
of the mortgage without regard to any acceleration under
the mortgage, or the full amount of any alternative mort-
gage payments agreed to by the mortgagee and mortgagor
on the date that the application is approved by the Sec-
retary. This amount shall include the amount of principal,
interest, taxes, assessments, ground rents, hazard insur-
ance, any mortgage insurance or credit insurance pre-
miums, and reasonable attorneys’ fees incurred by such
mortgagee in relation to the arrearage.
(b) MONTHLY ASSISTANCE.—After the Secretary has
paid to the mortgagee the amount pursuant to subsection
(a), the Secretary may provide monthly mortgage assist-
ance payments to the mortgagee on behalf of the mortga-
gor.
(c) PERIOD FOR ASSISTANCE.—Payments under this
Act shall be provided for a period not to exceed 36 months,
either consecutively or nonconsecutively. The Secretary
shall establish procedures for periodic review of the mort-
gagor’s financial circumstances for the purpose of deter-
the property and by such other obligation as the Secretary
may require. The lien or other security interest of the Sec-
retary shall not be deemed to take priority over any other
secured lien or secured interest in effect against the mort-
gagor’s property on the date assistance payments begin.
The Secretary may allow subordination of the mortgage
assistance lien if such subordination is necessary to permit
the mortgagor to obtain a home improvement loan for re-
pairs necessary to preserve the property.
(e) TIME FOR PAYMENT.—The mortgagor shall make
the above payment to the Secretary at least 7 days before
each mortgage payment is due under the mortgage.
(f) REVIEW UPON DELINQUENCY.—If the mortgagor
fails to pay to the Secretary any amounts due directly
from him or her under this section not later than 15 days
after the due date, the Secretary shall review the mortga-
gor’s financial circumstances to determine whether the de-
linquency is the result of a change in the mortgagor’s fi-
nancial circumstance since the payment amount last was
determined. If the delinquency is not the result of a
change in the mortgagor’s financial circumstances, the
Secretary shall terminate the mortgage assistance pay-
ments and the mortgagee may, at any time thereafter,
take any legal action to enforce its mortgage without any
further restriction or requirement. If the delinquency is
the result of such a change, the Secretary shall modify
the mortgagor’s required payments to the Secretary as the
Secretary shall determine.
SEC. 7. DEFINITIONS.
For the purposes of this Act, the following definitions
apply:
(1) APPROVED
COUNSELING
AGENCY.—The
term ‘‘approved counseling agency’’ means a non-
profit housing counseling agency approved by the
Secretary pursuant to section 2(e).
(2) GROSS
HOUSEHOLD
INCOME.—The term
‘‘gross household income’’ means the total income of
a mortgagor, the mortgagor’s spouse, children resid-
ing in the same household as the mortgagor, and
any other resident of the household declared by the
mortgagor as a dependent for Federal tax purposes.
(3) HOUSING
EXPENSE.—The term ‘‘housing
expense’’ means the sum of the mortgagor’s monthly
maintenance, utility, and hazard insurance expense,
taxes, and required mortgage payments, including
escrows.
(4) NET EFFECTIVE INCOME.—The term ‘‘net
effective income’’ means the gross household income
of the mortgagor, less city, State, and Federal in-
come and social security taxes.
(5) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Housing and Urban Development.
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