SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Housing Options Made 
Effective Act’’ or the ‘‘HOME Act’’. 
SEC. 2. REQUIREMENT TO FILE NOTICE OF DEFAULT BE-
FORE FORECLOSURE. 
Notwithstanding any provision of State law, no judi-
cial or nonjudicial foreclosure may be initiated with re-
spect to any covered residential mortgage (as such term 
is defined in section 14) unless— 
(1) the mortgagee has filed for record, in the 
appropriate public office for filing or recordation of 
interests in or against real property for the State or 
jurisdiction in which the property subject to the 
mortgage is located, a notice of default that in-
cludes— 
(A) a statement identifying the covered 
residential mortgage, the name or names of the 
mortgagor and mortgagee, and the book and 
page, or instrument number, if applicable, 
where the mortgage is recorded or a description 
of the property subject to the mortgage; 
(B) a statement that a breach of the obli-
gation under the mortgage has occurred; 
(C) a statement setting forth the nature of 
each breach actually known to the mortgagee 
and of the mortgagee’s election to sell or cause 
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to be sold the property to satisfy that obligation 
and any other obligation secured by the mort-
gage that is in default; and 
(D) a declaration from the mortgagee 
that— 
(i) the mortgagee has complied with 
section 4 (relating to direct contact with 
the borrower to provide foreclosure avoid-
ance options); 
(ii) the mortgagee has used due dili-
gence, in accordance with the requirements 
of section 5, to contact the borrower; or 
(iii) the borrower has surrendered the 
property to the mortgagee; and 
(2) the 90-day period beginning upon the filing 
of the notice of default has expired. 
SEC. 3. REQUIREMENTS FOR FILING NOTICE OF DEFAULT. 
Notwithstanding any provision of State law, a mort-
gagee may not file notice of default, as required under sec-
tion 2(1), with respect to any covered residential mortgage 
unless— 
(1) the mortgagee has complied with the re-
quirements of section 4 (relating to direct contact 
with the borrower to provide foreclosure avoidance 
options) and the 30-day period beginning upon com-
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pliance with all requirements of section 4 has ex-
pired; 
(2) the mortgagee has used due diligence, in ac-
cordance with the requirements of section 5, to con-
tact the borrower and the 30-day period beginning 
upon compliance by the mortgagee with all require-
ments of such section has expired; or 
(3) the borrower has surrendered the property 
to the mortgagee. 
SEC. 4. DIRECT CONTACT WITH BORROWER TO PROVIDE 
FORECLOSURE AVOIDANCE OPTIONS. 
(a) IN GENERAL.—A mortgagee for a covered resi-
dential mortgage complies with the requirements of this 
section only if the mortgagee has taken all of the following 
actions: 
(1) DIRECT
CONTACT.—The mortgagee has 
made direct contact with the borrower via service, in 
person, or by telephone and notified the borrower— 
(A) that the borrower has a right to re-
quest a meeting with the mortgagee for the 
purpose of assessing the borrower’s financial 
situation and providing options for the borrower 
to avoid foreclosure, which may be held contem-
poraneously with or subsequent to such contact 
at the option of the borrower; and 
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(B) of the toll-free telephone number made 
available by the Department of Housing and 
Urban Development to locate a housing coun-
seling agency certified by the Department. 
(2) ASSESSMENT
OF
FINANCIAL
CONDITION 
AND OPTIONS TO AVOID FORECLOSURE.— 
(A) IN GENERAL.—If requested by the bor-
rower, the mortgagee has conducted a meeting 
with the borrower, not later than 14 days after 
the request was made, during which the mort-
gagee has provided the borrower with an assess-
ment of the borrower’s financial situation and 
options for the borrower to avoid foreclosure. 
(B) TELEPHONE
MEETINGS.—A meeting 
required under this paragraph may be con-
ducted by telephone. 
(C) TIMING.—A mortgagee may comply 
with the requirements for a meeting under this 
paragraph by fulfilling such requirements upon 
making contact with the borrower in accordance 
with paragraph (1) or by holding a subsequent 
meeting. 
(D) BORROWER’S USE OF DESIGNEE.— 
(i) AUTHORITY.—A borrower may 
designate a housing counseling agency cer-
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tified by the Department of Housing and 
Urban Development, attorney, or other ad-
visor to discuss options for the borrower to 
avoid foreclosure with the mortgagee. 
(ii) PROCEDURE.—To designate a 
housing counseling agency certified by the 
Department of Housing and Urban Devel-
opment for purposes of this subparagraph, 
a borrower shall send a notarized letter to 
the mortgagee stating that the borrower 
has designated such a counselor to discuss 
options to foreclosure. 
(iii) BORROWER RESPONSIBILITY FOR 
FINAL
DECISION.—Notwithstanding 
the 
designation of any housing counseling 
agency by a borrower pursuant to this sub-
paragraph, the mortgagee may not accept 
a final determination regarding acceptance 
or denial of any loan modification or work-
out plan offered to the borrower except di-
rectly from the borrower. 
(3) LOAN
MODIFICATIONS
AND
WORKOUT 
PLANS.—Any loan modification or workout plan of-
fered by the mortgagee to the borrower under a cov-
ered residential mortgage pursuant to contact or 
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meetings required under this section shall be an 
offer that— 
(A) fulfills payment of the principal obliga-
tion of the mortgage; and 
(B) minimizes the loss of the mortgagee. 
(b) PARTICIPATION
OF
LOSS
MITIGATION
PER-
SONNEL.—Any loss mitigation personnel of a mortgagee 
may participate by telephone during any contact required 
by this section. 
SEC. 5. DUE DILIGENCE IN ATTEMPTING TO CONTACT BOR-
ROWER. 
(a) IN GENERAL.—The mortgagee for a covered resi-
dential mortgage shall be considered for purposes of sec-
tion 2(a)(2) to have used due diligence in accordance with 
this section to contact the borrower under the mortgage 
only if the mortgagee complies with the following require-
ments: 
(1) FIRST
ATTEMPT.—The mortgagee shall 
send to the borrower at the address of the property 
subject to the mortgage and all other addresses of 
the borrower known to the mortgagee, by first-class 
mail, a letter that— 
(A) states that the borrower is delinquent 
on payments due under the mortgage; 
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mortgagee shall send to the borrower at the address 
of the property subject to the mortgage and all other 
addresses of the borrower known to the mortgagee, 
by certified mail, with return receipt requested, a 
letter that contains the information specified in sub-
paragraphs (A) through (D) of paragraph (1). 
(4) PROCESS
SERVER.—If the borrower does 
not contact the mortgagee within 14 days after the 
certified letter is sent pursuant to paragraph (3), or 
the certified letter is returned to the mortgagee 
marked ‘‘return to sender,’’ the mortgagee shall uti-
lize the services of a private process server to deliver 
the contents of the certified letter to the borrower. 
(5) WEB POSTING.—If the mortgagee maintains 
or has a location on the World Wide Web, the mort-
gagee shall post a prominent link on the homepage 
of such website to the following information: 
(A) A list of financial documents that bor-
rowers in default should collect and be prepared 
to present to the mortgagee when discussing 
options for avoiding foreclosure. 
(B) A toll-free telephone number by which 
borrowers who wish to discuss options for 
avoiding foreclosure may discuss such options 
with the mortgagee. 
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(C) The toll-free telephone number made 
available by the Department of Housing and 
Urban Development to locate a housing coun-
seling agency certified by the Department. 
(6) DIRECT CONTACT.—If, before the expiration 
of the 30-day period beginning upon compliance by 
the mortgagee with all requirements of this section, 
the borrower requests a meeting with the mortgagee 
for the purpose of assessing the borrower’s financial 
situation and providing options for the borrower to 
avoid foreclosure— 
(A) the mortgagee shall conduct such a 
meeting with the borrower in accordance with 
the requirements of paragraphs (2) and (3) of 
section 4(a); and 
(B) for purposes of section 3(1), the mort-
gagee shall be considered to have complied with 
section 4 upon completion of the requirements 
under subparagraph (A) of this paragraph. 
(b) AUTHORITY TO CHARGE FEES.—The mortgagee 
under a covered residential mortgage entered into after 
the date of the enactment of this Act may assess a fee 
to the borrower in an amount such the aggregate of such 
fees for all covered mortgages entered into by such mort-
gagee does not exceed the amount reasonably estimated 
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to be necessary to cover the costs of actions taken pursu-
ant to paragraphs (1) through (5) of subsection (a) with 
respect to all covered residential mortgages of such mort-
gagee. 
SEC. 6. DUTIES REGARDING LOAN MODIFICATIONS AND 
WORKOUT PLANS. 
(a) DUTIES OF LOAN SERVICERS.—Any duty any 
servicer of covered residential mortgages may have to 
maximize net present value under their pooling and serv-
icing agreements relating to such mortgages is owed to 
all parties in a loan pool, not to any particular parties, 
and a servicer of such mortgages acts in the best interests 
of all parties if the servicer agrees to or implements a loan 
modification or workout plan for such any such a mort-
gage for which both of the following apply: 
(1) The mortgage is in payment default, or pay-
ment default is reasonably foreseeable. 
(2) Anticipated recovery under the loan modi-
fication or workout plan relating to the mortgage ex-
ceeds the anticipated recovery through foreclosure on 
a net present value basis. 
(b) OFFERING OF WORKOUTS.—The mortgagee for 
a covered residential mortgage described in subsection (a) 
shall offer the borrower a loan modification or workout 
plan in accordance with section 4. 
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SEC. 7. ACCURATE CREDIT REPORTING. 
(a) REPORTING OF SUBSEQUENT MORTGAGE PAY-
MENTS.—In the case of any covered residential mortgage 
for which any loan modification or workout plan has been 
negotiated between the borrower and the mortgagee and 
agreed to or implemented, any payments due under the 
mortgage after such agreement or implementation made 
on time and pursuant to the loan modification or workout 
plan shall be reported to the appropriate consumer report-
ing agency described in section 603(p) of the Fair Credit 
Reporting Act and included in the consumer file for such 
borrower at such agency and in any consumer report (as 
defined in section 603 of the Fair Credit Reporting Act) 
prepared from such file. 
(b) RULE OF CONSTRUCTION.—This section may not 
be construed to authorize the omission, from any con-
sumer file or consumer report for any borrower under a 
covered residential mortgage, of any delinquent payments 
due under the mortgage before or after agreement to or 
implementation of any loan modification or workout plan 
for the mortgage. 
SEC. 8. LOAN MODIFICATION OR WORKOUT PLAN. 
(a) INCLUSION OF PROVISION.—Any covered residen-
tial mortgage agreement that is entered into after the date 
of the enactment of this Act shall contain a provision 
that— 
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(1) grants the borrower under the mortgage 
and the mortgagee the right to negotiate a loan 
modification or workout plan if— 
(A) the mortgage is in payment default or 
payment default is reasonably foreseeable; or 
(B) in the case of a mortgagee, the antici-
pated recovery under a loan workout plan ex-
ceeds the anticipated recovery through fore-
closure on a net present value basis; and 
(2) requires that any such loan modification or 
workout plan offered or agreed to comply with the 
requirements under section 4(a)(3). 
(b) DEPOSIT OF PAYMENT.—If the borrower under 
a covered residential mortgage agrees to a loan modifica-
tion or workout plan for the mortgage, pursuant to a pro-
vision included in a mortgage agreement pursuant to sub-
section (a) of this section or pursuant to or pursuant to 
section 4(a), any payments due under the mortgage made 
pursuant to the loan modification or workout plan shall 
be deposited directly into the account of the mortgagee. 
(c) RULE OF CONSTRUCTION.—This section may not 
be construed to require the mortgagee for any covered res-
idential mortgage to reduce the principal amount due 
under the mortgage, or to prevent the mortgagee from 
taking action to minimize the mortgagee’s financial loss. 
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SEC. 9. APPLICATION OF PARTIAL PAYMENTS. 
(a) SEPARATE ACCOUNT.—The mortgagee for a cov-
ered residential mortgage may not refuse, and shall credit 
to the account of the borrower under such mortgage, any 
partial payments of amounts due under the mortgage. 
(b) EFFECT ON FORECLOSURE.—Acceptance of par-
tial payments by the mortgagee for a covered residential 
mortgage shall not affect determination of default under 
the mortgage. 
SEC. 10. RIGHTS OF RENTERS IN FORECLOSURE. 
(a) IN GENERAL.—In the case of any foreclosure of 
any covered residential mortgage for a property: 
(1) RIGHT TO OCCUPY PROPERTY.—Any suc-
cessor in interest in such property pursuant to the 
foreclosure shall assume such interest subject to the 
rights of any tenant of the property under the au-
thority of a lease entered into before the initiation 
of such foreclosure to occupy the property until the 
end of the remaining term of the lease or the evic-
tion pursuant only to a notice of eviction served on 
such tenant after the expiration of the 6-month pe-
riod beginning upon foreclosure of the mortgage, 
whichever occurs first. 
(2) NOTICE TO TENANT OF SALE.—Upon post-
ing a notice of sale pursuant to foreclosure, the 
mortgagee shall immediately inform any tenant of 
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the property under the authority of a lease entered 
into before the initiation of such foreclosure that the 
property may be sold in connection with such fore-
closure, and the mortgagee shall inform any such 
tenant of the date, time, and location of such sale 
if that information is known upon the posting of no-
tice of sale. 
(3) REQUIREMENT TO USE DUE DILIGENCE TO 
CONTACT TENANT.—The mortgagee shall use due 
diligence, in accordance with the requirements of 
subsection (b), to contact each tenant of the prop-
erty under the authority of a lease entered into be-
fore the initiation of such foreclosure. 
(b) DUE DILIGENCE TO CONTACT TENANT.—The 
mortgagee for a covered residential mortgage shall be con-
sidered for purposes of subsection (a)(3) to have used due 
diligence in accordance with this subsection to contact the 
tenant of the property subject to a covered residential 
mortgage that is being foreclosed only if the mortgagee 
sends to the tenant at the address of the property subject 
to the mortgage, by certified mail, with return receipt re-
quested, a letter that contains the following information: 
(1) A statement that the property may be sold 
at a foreclosure sale. 
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(2) A statement that such tenant may be evict-
ed pursuant only to a notice of eviction served on 
such tenant after the expiration of the 6-month pe-
riod beginning upon foreclosure of the mortgage. 
(3) A statement that the tenant should contact 
the borrow under the mortgage or the landlord re-
garding the foreclosure and continued residence in 
the property. 
(4) An address and telephone number at which 
to contact the borrower or landlord. 
(c) RULE OF CONSTRUCTION.—Nothing in this sec-
tion may be construed to prevent any successor in interest 
in a property pursuant to foreclosure on a covered residen-
tial mortgage from entering into, with any tenant of the 
property under the authority of a lease entered into before 
such foreclosure, a new lease for the property or from hon-
oring or extending such previous lease. 
SEC. 11. REQUIREMENT TO FILE NOTICE OF SALE BEFORE 
FORECLOSURE SALE. 
Notwithstanding any provision of State law, in the 
case of any covered residential mortgage for which any 
judicial or non-judicial foreclosure has been initiated, no 
sale of the property subject to such mortgage may be initi-
ated unless— 
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(1) the mortgagee has filed for record, in the 
appropriate public office for filing or recordation of 
interest in or against real property for the State or 
jurisdiction in which the property subject to the 
mortgage is located, a notice of sale that includes— 
(A) a statement that a notice of default re-
quired under section 2 was filed; 
(B) a declaration that the mortgagee has 
complied with the requirements under section 3 
(relating to requirements for filing notice of de-
fault); 
(C) identification of the time, place, and 
location of the foreclosure auction or sale; and 
(D) an address and telephone number at 
which to contact the mortgagee; and 
(2) a copy of the notice filed under paragraph 
(1)— 
(A) is posted on the property to subject to 
the foreclosure sale for the 21-day period end-
ing upon such sale; 
(B) published in a daily or weekly publica-
tion having wide circulation in the area in 
which the property is located not less than once 
a week during the 3-week period ending upon 
such sale; and 
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(C) is mailed to the borrower not less than 
20 days before the sale and to any other party 
that requests the mortgagee to provide such no-
tice. 
SEC. 12. ADMINISTRATIVE ENFORCEMENT. 
Compliance with the requirements of this Act shall 
be enforced in the same manner and by the same means 
that compliance with the requirements imposed under the 
Truth in Lending Act are enforced under section 108 of 
such Act (15 U.S.C. 1607). 
SEC. 13. PREEMPTION. 
This Act shall not preempt any provision of State law 
that provides greater protection to borrowers under resi-
dential mortgages. 
SEC. 14. DEFINITIONS. 
For purposes of this Act, the following definitions 
shall apply: 
(1) COVERED
RESIDENTIAL
MORTGAGE.—The 
term ‘‘covered residential mortgage’’ means a mort-
gage that is a first or subsequent lien on residential 
real property (including individual units of con-
dominiums and cooperatives) that is designed prin-
cipally for the occupancy of from one to four fami-
lies and is used as a residence of the borrower under 
the mortgage. 
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(2) MORTGAGEE.—The term ‘‘mortgagee’’ in-
cludes, with respect to a mortgage, any beneficiary 
or authorized agent of the mortgagee. 
(3) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Housing and Urban Development. 
SEC. 15. INAPPLICABILITY AND EFFECTIVE DATE. 
(a) INAPPLICABILITY.—This Act shall not apply to 
any covered residential mortgage— 
(1) for which the mortgagee has filed notice of 
default before the date of the enactment of this Act; 
(2) secured by a lien on property that the bor-
rower has surrendered, as evidenced by a written 
confirmation of the surrender or delivery of the keys 
to the property to the mortgagee; or 
(3) the borrower under which has filed for 
bankruptcy and for which the proceedings have not 
been finalized. 
(b) EFFECTIVE DATE.—This Act shall take effect on 
the date of the enactment of this Act. 
Æ 
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