SEC. 2. SAFE HARBOR FOR HOLDERS ENGAGED IN TROU-
BLED DEBT RESTRUCTURING WITH REGARD 
TO RESIDENTIAL MORTGAGE LOANS. 
(a) IN GENERAL.—Chapter 2 of the Truth in Lend-
ing Act (15 U.S.C. 1631 et seq.) is amended by inserting 
after section 129 the following new section: 
‘‘§ 129A. Safe harbor for holders engaged in troubled 
debt restructuring with regard to resi-
dential mortgage loans 
‘‘(a) IN GENERAL.—A creditor, assignee, servicer, 
securitizer, or other holder of a residential mortgage loan 
shall not be liable to any person under any law or regula-
tion of the United States or any law or regulation of any 
State or political subdivision of any State, or under any 
contract, for entering into a qualified loan modification or 
workout plan on any residential mortgage loan, as pro-
vided by this subsection, that was consummated on or 
after January 1, 2004. 
‘‘(b) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
‘‘(1) 
QUALIFIED
LOAN
MODIFICATION
OR 
WORKOUT PLAN.—The term ‘qualified loan modifica-
tion or workout plan’ means a troubled debt restruc-
turing that meets the following criteria with respect 
to a residential mortgage loan: 
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‘‘(A) The loan is in payment default under 
the loan agreements or payment default is im-
minent or reasonably foreseeable. 
‘‘(B) The creditor, assignee, servicer, 
securitizer, or other holder reasonably believes 
that the net present value to be realized on the 
loan, as determined under the applicable con-
tract, will be maximized by entering into the 
workout plan. 
‘‘(2) QUALIFIED MORTGAGE.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
mortgage’ means— 
‘‘(i) any residential mortgage loan 
that constitutes a first lien on the dwelling 
or real property securing the loan and ei-
ther— 
‘‘(I) has an annual percentage 
rate that does not equal or exceed the 
yield on securities issued by the Sec-
retary of the Treasury under chapter 
31 of title 31, United States Code, 
that bear comparable periods of matu-
rity by more than 3 percentage points; 
or 
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‘‘(II) has an annual percentage 
rate that does not equal or exceed the 
most recent conventional mortgage 
rate, or such other annual percentage 
rate as may be established by regula-
tion under paragraph (6), by more 
than 175 basis points; 
‘‘(ii) any residential mortgage loan 
that is not the first lien on the dwelling or 
real property securing the loan and ei-
ther— 
‘‘(I) has an annual percentage 
rate that does not equal or exceed the 
yield on securities issued by the Sec-
retary of the Treasury under chapter 
31 of title 31, United States Code, 
that bear comparable periods of matu-
rity by more than 5 percentage points; 
or 
‘‘(II) has an annual percentage 
rate that does not equal or exceed the 
most recent conventional mortgage 
rate, or such other annual percentage 
rate as may be established by regula-
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tion under paragraph (6), by more 
than 375 basis points; and 
‘‘(iii) a loan made or guaranteed by 
the Secretary of Veterans Affairs. 
‘‘(B) MOST RECENT CONVENTIONAL MORT-
GAGE RATE.—The term ‘most recent conven-
tional mortgage rate’ means the contract inter-
est rate on commitments for fixed-rate first 
mortgages most recently published in the Fed-
eral Reserve Statistical Release on selected in-
terest rates (daily or weekly), and commonly re-
ferred to as the H.15 release (or any successor 
publication), in the week preceding a date of de-
termination for purposes of applying this sub-
section. 
‘‘(3) 
RESIDENTIAL
MORTGAGE
LOAN
DE-
FINED.—For purposes of this subsection, the term 
‘residential mortgage loan’ means a loan that is se-
cured by a lien on an owner-occupied dwelling and 
is not a qualified mortgage. 
‘‘(4) SECURITIZATION
VEHICLE.—The term 
‘securitization vehicle’ means a trust, corporation, 
partnership, limited liability entity, or special pur-
pose entity that— 
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‘‘(A) is the issuer, or is created by the 
issuer, of mortgage pass-through certificates, 
participation certificates, mortgage-backed secu-
rities, or other similar securities backed by a 
pool of assets that includes residential mortgage 
loans; and 
‘‘(B) holds such loans. 
‘‘(5) SECURITIZER.—The term ‘securitizer’ 
means the person that transfers, conveys, or assigns, 
or causes the transfer, conveyance, or assignment of, 
residential mortgage loans, including through a spe-
cial purpose vehicle, to any securitization vehicle, ex-
cluding any trustee that holds such loans solely for 
the benefit of the securitization vehicle. 
‘‘(c) EFFECTIVE PERIOD.—This section shall apply 
only with respect to qualified loan modification or workout 
plans initiated during the 6-month period beginning on the 
date of the enactment of this section.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 2 of the Truth in Lending Act is amended 
by adding after the item relating to section 129 the fol-
lowing new item: 
‘‘129A. Safe harbor for holders engaged in troubled debt restructuring with re-
gard to residential mortgage loans.’’. 
Æ 
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