I
106TH CONGRESS
1ST SESSION
H. R. 595
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
FEBRUARY 4, 1999
Mr. GUTIERREZ (for himself, Mr. FATTAH, Mr. FRANK of Massachusetts, Mr.
BORSKI, Mr. CAPUANO, Mr. DAVIS of Illinois, Mr. EVANS, Ms. LEE, Mr.
LIPINSKI, Mr. MEEKS of New York, Mr. RUSH, Ms. SCHAKOWSKY, Mr.
SHOWS, and Mr. TOWNS) introduced the following bill; which was re-
ferred 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.
This 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 control of the
mortgagor which render the mortgagor unable to
correct the delinquency on the mortgage and unable
to make full mortgage payments before the expira-
tion of the 60-day period beginning on the date that
notice 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) 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.
(c) DETERMINATION
RELATING
TO
FINANCIAL
HARDSHIP.—In determining whether a financial hardship
(which may be caused by a reduction in income or an in-
crease in expenses, or both) is due to circumstances be-
yond the control of a mortgagor, the Secretary may con-
sider information regarding the mortgagor’s employment
record, credit history, and current income. Such cir-
cumstances shall include, but not be limited to—
(1) loss of job of a member of the household;
(2) salary, wage or earnings reduction of a
member of the household;
(3) injury, disability or illness of a member of
the household;
(4) divorce or separation in the household; or
(5) death of a member of the household.
(d) 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) of this section and to section
4(b)(1)(A). Nonprofit housing agencies designated and ap-
proved under this subsection shall provide assistance to
an eligible mortgagor during the entire period that such
mortgagor receives assistance under this Act.
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, but not limited to,
mortgage foreclosure to recover under such obligation) or
take possession of any security of the mortgagor for such
mortgage obligation unless the mortgagee has sent to the
mortgagor notice pursuant to subsection (b). In addition,
the mortgagee may not take such action—
(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 but 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.—The Secretary
shall issue regulations that include, but are not limited
to, a uniform notice under this section. Such notice shall
be in plain language and shall—
(1) inform the mortgagor in large bold type
that he or she may be eligible for temporary assist-
ance in making mortgage payments;
(2) include an explanation of the mortgage as-
sistance program under this Act;
(3) inform the mortgagor that to apply for
mortgage assistance, he or she shall attend a meet-
ing in accordance with section 4(a) within 30 days
of the date of the notice;
(4) include the legal action intended and the
basis therefore;
(5) include a list of approved counseling agen-
cies located in the State in which the mortgagor re-
sides;
(6) be sent via first class mail to the last known
address of the mortgagor; and
(7) be subject to such other requirements as
prescribed by the Secretary.
SEC. 4. APPLICATION FOR ASSISTANCE.
(a) MEETING.—
ance under this Act may be denied assistance and required
to immediately repay any amount of assistance received,
and the mortgagee may, at any time thereafter, take any
legal action to enforce the mortgage without any further
restrictions or requirements under this Act.
(f) AVAILABILITY.—An application for assistance
under this Act may be obtained from an approved counsel-
ing agency.
(g) DETERMINATION ON APPLICATION.—
(1) TIME PERIOD.—The Secretary shall deter-
mine eligibility of a mortgagor for assistance under
this Act not later than 60 days after receipt of the
application of the mortgagor.
(2) NOTIFICATION.—Not later than 5 business
days after making the determination on an applica-
tion for assistance, the Secretary shall notify the
mortgagor and the mortgagee as to whether the ap-
plication has been approved or disapproved.
SEC. 5. ASSISTANCE PAYMENTS BY SECRETARY.
(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 PAYMENTS.—
(1) IN GENERAL.—The Secretary shall make
monthly mortgage assistance payments to the mort-
gagee on behalf of the mortgagor pursuant to this
Act.
(2) OBLIGATION
OF
THE
MORTGAGOR.—A
mortgagor on whose behalf the Secretary is making
the mortgage assistance payments shall pay monthly
payments to the Secretary. Such payments shall be
in an amount which will cause the mortgagor’s total
housing expense not to exceed 35 percent of the
mortgagor’s net effective income. This shall be the
maximum amount the mortgagor can be required to
pay during the 36 months a mortgagor is eligible for
mortgage assistance. The mortgagor shall make such
payments at least 7 days before each mortgage pay-
ment is due under the mortgage.
(3) OBLIGATION
OF
THE
SECRETARY.—Upon
receipt of this payment from the mortgagor, the Sec-
retary or the Secretary’s duly authorized agent shall
send the total mortgage payment directly to the
mortgagee.
(c) REVIEW UPON DELINQUENCY.—If the mortgagor
fails to pay to the Secretary any amounts due directly
from the mortgagor under this section not later than 15
days after such due date, the Secretary or its designated
agent shall review the mortgagor’s financial circumstances
to determine whether a delinquency in payments due from
the mortgagor under this section or section 6 is the result
of a change in the mortgagor’s financial circumstances
since the payment amount was last determined. If the de-
linquency is not the result of a change in the mortgagor’s
financial circumstances, the Secretary shall terminate fu-
ture mortgage assistance payments and the mortgagee
may, at any time thereafter, take any legal action to en-
force its mortgage without any further restriction or re-
quirement. If the delinquency is the result of such a
change, the Secretary shall modify the mortgagor’s re-
quired payments to the Secretary as the Secretary shall
determine.
(d) 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-
mining the necessity for continuation, termination, or ad-
justment of the amount of the payments.
SEC. 6. REPAYMENT OF ASSISTANCE.
(a) ASSISTANCE LOAN.—The amount by which the
assistance payments made by the Secretary to the mortga-
gee exceeds the amount of payments made by the mortga-
gor to the Secretary shall be a loan by the Secretary to
the mortgagor. The loan shall be evidenced by such docu-
ments as the Secretary shall determine necessary to pro-
tect the interests of the United States.
(b) REPAYMENT
OF ASSISTANCE LOAN.—Before
making assistance payments under this Act on behalf of
a mortgagor, the Secretary shall enter into an agreement
with the mortgagor for repayment of all mortgage assist-
ance made by the Secretary under section 5, plus interest
as provided in subsection (c). The agreement shall provide
for monthly payments by the mortgagor to the Secretary
which (1) shall begin once the Secretary has determined
that continuation of mortgage assistance payments to the
mortgagee is unnecessary, and (2) shall be in an amount
determined as follows:
(1) HOUSING
EXPENSE
LESS
THAN
PER-
CENT.—If the mortgagor’s total housing expense is
less than 35 percent of the mortgagor’s net effective
income, the mortgagor shall pay to the Secretary the
difference between 35 percent of the mortgagor’s net
effective income and the mortgagor’s total housing
expense unless otherwise determined by the Sec-
retary after examining the mortgagor’s financial cir-
cumstances and ability to contribute to repayment of
the mortgage assistance.
(2) HOUSING EXPENSE GREATER THAN 35 PER-
CENT.—If the mortgagor’s total housing expense is
more than 35 percent of the mortgagor’s net effec-
tive income, repayment of the mortgage assistance
shall be deferred until the mortgagor’s total housing
expense is less than 35 percent of the mortgagor’s
net effective income.
(3) WHEN MORTGAGE PAID IN FULL.—Notwith-
standing paragraphs (1) and (2), if repayment of
mortgage assistance is not made by the date that
the mortgage is paid in full, the mortgagor shall
make mortgage assistance repayments in an amount
not less than the previous regular mortgage payment
until the mortgage assistance is repaid.
(c) INTEREST.—Interest shall accrue on all mortgage
assistance made under this Act at the rate determined
monthly by the Secretary of the Treasury to be equal to
the then current average yield on outstanding 30-year
bonds issued by the Secretary of the Treasury under sec-
tion 3102 of title 31, United States Code, and shall accrue
only during the period in which the mortgagor is required
to make repayment under this section.
(d) LIEN TO SECURE REPAYMENT
OF ASSIST-
ANCE.—Repayment of amounts owed to the Secretary
from a mortgagor shall be secured by a mortgage lien on
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 only if such subordination is necessary to
permit the mortgagor to obtain a home improvement loan
for repairs necessary to preserve the property.
(e) TIME FOR REPAYMENT.—Payments under this
section shall be made by the mortgagor to the Secretary
not later than 14 days after each mortgage payment is
due under the mortgage (or in the case of repayment after