IB 
Union Calendar No. 382 
110TH CONGRESS 
2D SESSION 
H. R. 5579 
[Report No. 110–615] 
To remove an impediment to troubled debt restructuring on the part of 
holders of residential mortgage loans, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 11, 2008 
Mr. CASTLE (for himself and Mr. KANJORSKI) introduced the following bill; 
which was referred to the Committee on Financial Services 
MAY 1, 2008 
Additional sponsor: Mr. SHERMAN 
MAY 1, 2008 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on March 11, 2008] 
A BILL 
To remove an impediment to troubled debt restructuring 
on the part of holders of residential mortgage loans, 
and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Emergency Mortgage 
Loan Modification Act of 2008’’. 
SEC. 2. SAFE HARBOR FOR QUALIFIED LOAN MODIFICA-
TIONS OR WORKOUT PLANS FOR CERTAIN 
RESIDENTIAL MORTGAGE LOANS. 
(a) STANDARD FOR LOAN MODIFICATIONS OR WORK-
OUT PLANS.—Absent contractual provisions to the con-
trary— 
(1) the duty to maximize, or to not adversely af-
fect, the recovery of total proceeds from pooled resi-
dential mortgage loans is owed by a servicer of such 
pooled loans to the securitization vehicle for the ben-
efit of all investors and holders of beneficial interests 
in the pooled loans, in the aggregate, and not to any 
individual party or group of parties; and 
(2) a servicer of pooled residential mortgage 
loans shall be deemed to be acting on behalf of the 
securitization vehicle in the best interest of all inves-
tors and holders of beneficial interests in the pooled 
loans, in the aggregate, if for a loan that is in pay-
ment default under the loan agreement or for which 
payment default is imminent or reasonably foresee-
able, the loan servicer makes reasonable and docu-
mented efforts to implement a modification or work-
out plan or, if such efforts are unsuccessful or such 
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plan would be infeasible, engages in other loss mitiga-
tion, including accepting a short payment or partial 
discharge of principal, or agreeing to a short sale of 
the property, to the extent that the servicer reasonably 
believes the particular modification or workout plan 
or other mitigation actions will maximize the net 
present value to be realized on the loan, including 
over that which would be realized through foreclosure. 
(b) SAFE HARBOR.—Absent contractual provisions to 
the contrary, a servicer of a residential mortgage loan that 
acts in a manner consistent with the duty set forth in sub-
section (a), shall not be liable for entering into a qualified 
loan modification or workout plan, to— 
(1) any person, based on that person’s ownership 
of a residential mortgage loan or any interest in a 
pool of residential mortgage loans or in securities that 
distribute payments out of the principal, interest and 
other payments in loans on the pool; 
(2) any person who is obligated pursuant to a 
derivatives instrument to make payments determined 
in reference to any loan or any interest referred to in 
paragraph (1); or 
(3) any person that insures any loan or any in-
terest referred to in paragraph (1) under any law or 
regulation of the United States or any law or regula-
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tion of any State or political subdivision of any 
State. 
(c) RULE OF CONSTRUCTION.—No provision of this 
section shall be construed as limiting the ability of a 
servicer to enter into loan modifications or workout plans 
other than qualified loan modification or workout plans. 
(d) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
(1) QUALIFIED LOAN MODIFICATION OR WORK-
OUT PLAN.—The term ‘‘qualified loan modification or 
workout plan’’ means a modification or plan that— 
(A) is scheduled to remain in place until 
the borrower sells or refinances the property, or 
for at least 5 years from the date of adoption of 
the plan, whichever is sooner; 
(B) does not provide for a repayment sched-
ule that results in negative amortization at any 
time; and 
(C) does not require the borrower to pay ad-
ditional points and fees. 
(2) NEGATIVE AMORTIZATION.—For purposes of 
paragraph (1), the term ‘‘negative amortization’’ does 
not include the capitalization of delinquent interest 
and arrearages. 
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Union Calendar No. 382 
110TH CONGRESS 
2D SESSION 
H. R. 5579 
[Report No. 110–615] 
A BILL 
To remove an impediment to troubled debt restruc-
turing on the part of holders of residential mort-
gage loans, and for other purposes. 
MAY 1, 2008 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
VerDate Aug 31 2005 
22:25 May 01, 2008
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PO 00000
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