I 
109TH CONGRESS 
2D SESSION 
H. R. 4991 
To require the Secretary of the Treasury to carry out a program to tempo-
rarily make payments under residential mortgage loans for properties 
significantly damaged by Hurricane Katrina. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 16, 2006 
Mr. JEFFERSON (for himself, Mr. TAYLOR of Mississippi, Mr. MELANCON, Mr. 
DAVIS of Alabama, Mr. BISHOP of Georgia, Mr. MCDERMOTT, Mr. FORD, 
Mr. WATT, Mr. OWENS, Ms. KILPATRICK of Michigan, and Mr. TOWNS) 
introduced the following bill; which was referred to the Committee on Fi-
nancial Services 
A BILL 
To require the Secretary of the Treasury to carry out a 
program to temporarily make payments under residential 
mortgage loans for properties significantly damaged by 
Hurricane Katrina. 
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 Preserva-
tion of Equity Act of 2006’’. 
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SEC. 2. HURRICANE KATRINA MORTGAGE PROTECTION 
PROGRAM. 
(a) IN GENERAL.—The Secretary of the Treasury, in 
consultation with the Federal banking agencies, the Na-
tional Credit Union Administration, and the appropriate 
State bank supervisors of each State contained in whole 
or in part in the GO Zone, shall establish a program to 
provide emergency mortgage assistance through the provi-
sion of direct mortgage payments on behalf of eligible indi-
viduals. 
(b) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
(1) CONSUMER
MORTGAGE.—The term ‘‘con-
sumer mortgage’’ means any consumer credit trans-
action (which term shall have the same meaning 
given such term for purposes of the Truth in Lend-
ing Act) in which a security interest, including any 
such interest arising by operation of law, is retained 
or acquired in any property that is used as the prin-
cipal dwelling (under the meaning given such term 
for purposes of section 121 of the Internal Revenue 
Code of 1986) of the person to whom credit is ex-
tended. 
(2) CONSUMER
MORTGAGE
PAYMENT.—The 
term ‘‘consumer mortgage payment’’ means the 
scheduled payment on a consumer mortgage for 
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principal, interest, and any scheduled deposit in an 
escrow account for the purpose of ensuring payment 
of taxes, insurance, or other charges with respect to 
the property securing such consumer mortgage. 
(3) ELIGIBLE
CONSUMER
MORTGAGE.—The 
term ‘‘eligible consumer mortgage’’ means a con-
sumer mortgage that meet the following require-
ments: 
(A) TIMING.—The mortgage was entered 
into before August 29, 2005. 
(B) GOOD STANDING.—As of August 28, 
2005, the mortgage was not in foreclosure. 
(C) 
PROPERTY
REQUIREMENTS.—The 
property in which a security interest was re-
tained or acquired under the mortgage— 
(i) was designed principally as a one- 
to four-family residence; 
(ii) was located in the GO Zone; 
(iii) was, as of August 28, 2005, the 
primary residence of the mortgagor; and 
(iv)(I) was significantly damaged by 
Hurricane Katrina or by flooding resulting 
from Hurricane Katrina; or 
(II) is uninhabitable as a result of 
damage or flooding resulting from Hurri-
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cane Katrina, including uninhabitability re-
sulting from lack of electricity, water, or 
other services due to such damage or flood-
ing. 
(D) 
SERVICER
AGREEMENTS.—The 
servicer for the mortgage has made such assur-
ances as the Secretary shall require to ensure 
that the servicer will comply with the require-
ments of subsection (h). 
(4) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible 
individual’’ means an individual— 
(A) who is a citizen, national, or qualified 
alien as defined in section 431(b) of the Per-
sonal Responsibility and Work Opportunity 
Reconciliation Act of 1996 (8 U.S.C. 1641(b)); 
(B) who was a mortgagor on an eligible 
consumer mortgage; 
(C) whose ability to continue meeting the 
consumer mortgage payment obligations under 
the eligible consumer mortgage was severely im-
paired as a result of hurricane-related disrup-
tion in the GO Zone, as determined in accord-
ance with a standard established by the 
Secetary that compares the debt of the indi-
vidual to the income of the individual; and 
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(D) who has agreed to the terms for repay-
ment of assistance under subsection (i). 
(5) FEDERAL
BANKING
AGENCY
AND
STATE 
BANK
SUPERVISOR.—The terms ‘‘Federal banking 
agency’’ and ‘‘State bank supervisor’’ have the 
meanings given such terms in section 3 of the Fed-
eral Deposit Insurance Act. 
(6) GO ZONE.—The term ‘‘GO Zone’’ has the 
meaning given such term in section 1400M of the 
Internal Revenue Code of 1986) 
(7) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of the Treasury. 
(8) SERVICER.—The term ‘‘servicer’’, with re-
spect to a consumer mortgage, has the meaning 
given such term in section 6(i) of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C. 
2605(i)). 
(9) HABITABLE; UNINHABITABLE.— 
(A) IN GENERAL.—The terms ‘‘habitable’’ 
and ‘‘uninhabitable’’ mean, with respect to a 
residence, that the residence has been deter-
mined to be fit or not to be fit, respectively, for 
human habitation. 
(B) 
DETERMINATION.—The 
Secretary 
shall, by regulations pursuant to subsection (l), 
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establish procedures and standards for deter-
minations of habitability and uninhabitability 
for purposes of the program under this section. 
Such standards shall take into consideration de-
terminations and declarations of habitability 
and unihabitability by Federal and State and 
local governments or agencies, including the 
Federal Emergency Management Agency and 
State and local disaster relief agencies, and by 
insurers, access or lack thereof to necessary in-
frastructure or services, including electricity, 
potable water, and waste water service, and 
such other factors as the Secretary considers 
appropriate. 
(c) MORTGAGE PAYMENT RELIEF PROGRAM.—The 
Secretary shall design and implement the program under 
this section in a manner that provides that assistance to 
be paid by the Secretary with respect to an eligible con-
sumer mortgage and on behalf of an eligible individual is 
paid directly to the servicer for such mortgage. 
(d) PERIOD OF ASSISTANCE.—Payments under the 
program under this section with respect to an eligible con-
sumer mortgage may be made only for consumer mortgage 
payments due under such mortgage during the period be-
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ginning on August 28, 2005, and ending on the earlier 
of— 
(1) March 1, 2007, or 
(2) the expiration of the 60-day period begin-
ning upon the the date that the eligible individual 
first reoccupies the property subject to the mort-
gage. 
(e) LIMITATIONS ON PAYMENTS.— 
(1) IN GENERAL.—Subject to subsection (f), in 
no case may the value of the assistance provided 
under the program under this section with respect to 
any eligible consumer mortgage exceed the aggregate 
amount of the consumer mortgage payments due 
under the mortgage during the period for which as-
sistance is provided for such mortgage under the 
program. 
(2) NO
DOUBLE
PAYMENTS.—The Secretary 
shall take appropriate actions to ensure that, in the 
case of any consumer mortgage payment paid by an 
eligible individual on an eligible consumer mortgage 
for any period for which payment has already been 
made under the program under this section, the 
servicer of the consumer mortgage shall return such 
payment within a reasonable period of time or shall 
immediately credit such payment toward amortiza-
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tion of the principal obligation under the mortgage 
and promptly notify the eligible individual of such 
credit. 
(3) TERMS OF PAYMENT.—For purposes of this 
section, the amount of any consumer mortgage pay-
ment shall be equal to the amount of such payment 
due under the terms of such consumer mortgage as 
in effect on August 28, 2005. 
(4) PROHIBITION
OF
FEES
AND
CHARGES.— 
Payments under the program under this section may 
not be made to the servicer of a consumer mortgage 
that provides for any penalites, fees, charges, addi-
tional interest, or servicing costs of any kind attrib-
utable to— 
(A) participation in the program under 
this section; 
(B) any prepayment of consumer mort-
gage, including prepayment involving applica-
tion of insurance proceeds to the mortgage; or 
(C) late payment of any consumer mort-
gage payment due under the consumer mort-
gage during the period beginning on August 28, 
2005, and ending on the commencement of pay-
ments under this section for the mortgage. 
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(5) REVERSAL OF ADVERSE ACTIONS ALREADY 
TAKEN.—Payments under the program under this 
section may not be made to the servicer of a con-
sumer mortgage if, during the period beginning on 
August 29, 2005, and ending upon the enrollment of 
the consumer mortgage in the program, the servicer 
has furnished to any consumer reporting agency (as 
such term is defined in section 603 of the Fair Cred-
it Reporting Act) any information that relates to 
such consumer mortgage or the mortgagor under 
such mortgage and is adverse to the interests of the 
mortgagor and has failed to withdraw or remove 
such information from the consumer reporting agen-
cy. 
(f) ENROLLMENT IN PROGRAM.— 
(1) EXPEDITED PROCESS.—The Secretary shall 
establish an expedited process, in accordance with 
this subsection, for the enrollment of eligible individ-
uals in the program under this section. 
(2) NOTIFICATION.—To be eligible to receive 
payments under the program under this section, the 
servicer of a consumer mortgage shall notify the 
Secretary— 
(A) of the nonpayment of a scheduled con-
sumer mortgage payment from an individual in 
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GO Zone, not earlier than 31 days following 
such nonpayment; or 
(B) of a communication to the servicer by 
an individual reasonably indicating eligibility for 
assistance under the program, after such com-
munication. 
(3) ENROLLMENT.—The Secretary, upon re-
ceipt of a notice under paragraph (2) regarding a 
consumer mortgage, shall enroll the eligible indi-
vidual involved in the program under this section, 
subject to the servicer of the mortgage submitting 
such confirmation to the Secretary as the Secretary 
shall require that the servicer has verified, in accord-
ance with such procedures as the Secretary shall es-
tablish, that mortgagor under such consumer mort-
gage is an eligible individual and that the consumer 
mortgage is an eligible consumer mortgage. 
(4) DUTY OF SERVICER.—The servicer of a con-
sumer mortgage shall make a reasonable effort to 
notify an eligible individual— 
(A) of the enrollment of such individual in 
the program under paragraph (3); 
(B) that, if it is later determined that the 
individual is not an eligible individual or the 
consumer mortgage is not an eligible consumer 
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mortgage (as determined by the audit process 
under subsection (g) or otherwise), such 
servicer may be required at a later date to 
repay the program for the total amount of con-
sumer mortgage payments made by the Sec-
retary on behalf of such individual, but that 
there shall be no liability on the part of the in-
dividual to repay the program for such 
amounts; and 
(C) that such individual may elect to de-
cline enrollment, or cancel enrollment, in the 
program by notifying the servicer involved. 
(g) RETROSPECTIVE AUDIT.— 
(1) IN GENERAL.—The Secretary shall provide 
for the performance of an appropriate audit of the 
program under this section by a date that is not 
later than 180 days after the date of the enactment 
of this Act. 
(2) REPAYMENT
OF
IMPROPERLY
PROVIDED 
FUNDS.— 
(A) ACTION BY SECRETARY.—If the Sec-
retary determines, pursuant to the audit under 
paragraph (1) or otherwise, that an individual 
that was enrolled in the program under this 
section was not an eligible individual under sub-
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section (b) or the consumer mortgage was not 
an eligible consumer mortgage, the Secretary 
shall seek repayment from the servicer of the 
consumer mortgage of the amounts paid under 
the program on behalf of such individual. Such 
individual shall not be liable to the Secretary 
for the repayment of such amounts paid under 
the program on behalf of the individual. 
(B) TERMS OF REPAYMENT.—Any repay-
ment pursuant to subparagraph (A) shall be 
made with no interest or late penalty to accrue 
prior to the commencement of a repayment pe-
riod which shall begin not earlier than the date 
that is 3 months after the date on which a de-
termination and notice of noneligibility is pro-
vided. 
(h) PROHIBITED ACTIONS.—During the period that 
payments are made under the program under this section 
for an eligible consumer loan, a servicer who accepts pay-
ments under the program under this section with respect 
to any eligible consumer mortgage, and any person who 
makes or holds such eligible consumer mortgage (if other 
than the servicer), may not— 
(1) accelerate the maturity of or commence any 
legal action regarding such mortgage (including 
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mortgage foreclosure to recover under such obliga-
tion) or take possession of any security of the mort-
gagor for such eligible consumer mortgage obliga-
tion; 
(2) increase the annual percentage rate of inter-
est with respect to such eligible consumer mortgage, 
except in the case of any mortgage the terms of 
which provide for changes in the rate of interest that 
are not made in connection with delinquency, de-
fault, or other credit-related events; 
(3) refuse to accept, prevent, or otherwise limit 
the prepayment (in whole or in part) of any out-
standing principal amount due under the mortgage, 
including prepayment involving application of any 
insurance proceeds; or 
(4) impose any other fees or charges with re-
spect to such consumer mortgage, including any fees 
or charges for any prepayment described in para-
graph (3). 
(i) REPAYMENT OF ASSISTANCE AMOUNTS.—Assist-
ance under the program under this section may not be 
provided with respect to a consumer mortgage unless the 
eligible individual who is the mortgagor under such mort-
gage enters into an agreement with the Secretary that the 
aggregate amount of all such assistance provided for such 
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mortgage will be repaid to the Secretary, together with 
interest on such amounts, as follows: 
(1) INTEREST.—The interest on amounts of as-
sistance provided under the program shall accrue at 
a rate, as determined by the Secretary, that is equal 
to 50 percent of the average rate payable by the 
Treasury on its obligations having a 5-year term to 
maturity and outstanding as of September 1, 2005, 
until full repayment is made. 
(2) SILENT SECOND MORTGAGE.—Amounts of 
assistance and interest shall be secured by a lien on 
the property in the aggregate amount of such assist-
ance and interest, that is held by the Secretary and 
shall be subordinate to all other mortgages on the 
property and to any Federal tax lien, but shall be 
superior to any other lien. The lien shall be extin-
guished upon sale or transfer of the property by the 
mortgagor and the payment to the Secretary from 
the proceeds of such sale or transfer of the aggre-
gate amount of such assistance and interest. The 
Secretary may not require the mortgagor to repay 
any amount of assistance or interest until the prop-
erty is sold or otherwise transferred. 
(3) PREPAYMENT.—Notwithstanding the third 
sentence of paragraph (2), the mortgagor may make 
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payments, in whole or in part, of amounts of assist-
ance and interest owed to the Secretary pursuant to 
this subsection at any time after payments under 
this section on behalf of the mortgagor have con-
cluded and no penalty, fee, or charge may be im-
posed for any payments made before sale or transfer 
of the property by the mortgagor. 
(4) SECONDARY MARKET.—The Secretary may 
sell and otherwise deal in liens established under this 
section, and may issue and guarantee securities 
backed by liens established under this section, as the 
Secretary considers appropriate. 
(j) PENALTIES.— 
(1) IN
GENERAL.—In the case of each con-
sumer mortgage that is submitted under subsection 
(f) to the Secretary by a servicer and confirmed by 
the servicer as eligible for participation in the pro-
gram under this section that is not an eligible con-
sumer mortgage or for which the mortgagor is not 
an eligible individual, the Secretary may assess to 
the servicer, for each such mortgage so submitted— 
(A) a civil penalty in an amount not ex-
ceeding the amount of any mortgage payments 
received as a consequence of submission of such 
ineligible mortgage or individual; and 
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(B) interest, at a rate determined by the 
Secretary, for the period that any amounts im-
properly paid under the program on behalf of 
such mortgage were held by the servicer. 
(2) INTENTIONAL
VIOLATIONS.—If the Sec-
retary determines that any submission of a mortgage 
to which paragraph (1) applies was made with inten-
tional or reckless disregard of the requirements 
under subsection (f)(3) regarding verification proce-
dures or with actual knowledge that the consumer 
mortgage or the mortgagor under the consumer 
mortgage was not eligible for assistance under the 
program under this section, the Secretary may as-
sess to the servicer, for each such mortgage so sub-
mitted— 
(A) a civil penalty in an amount not ex-
ceeding three times the amount of any mort-
gage payments received as a consequence of 
submission of such ineligible mortgage or indi-
vidual; and 
(B) interest, at a rate determined by the 
Secretary, for the period that any amounts im-
properly paid under the program on behalf of 
such mortgage were held by the servicer. 
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(3) EFFECT
ON
OTHER
LAW.—The penalties 
under this subsection shall be in addition to any 
other remedies and penalties provided by other pro-
visions of Federal and State law, including any civil 
and criminal penalties for fraud and false state-
ments. 
(k) EXCLUSION OF MORTGAGE RELIEF PAYMENTS 
FROM INCOME
OF MORTGAGOR.—Any amounts paid 
under the program under this section with respect to an 
eligible consumer mortgage shall not be included as gross 
income of the eligible individual who is the mortgagor 
under such mortgage for purposes of the Internal Revenue 
Code of 1986 or for any other program for benefits, pay-
ments, or assistance for an individual, household, or fam-
ily eligiblity unit provided by any Federal or State agency 
or by appropriated funds of the United States or any 
State, for which eligibility is determined on the basis of 
income or assets or any other test of means. 
(l) EXPEDITED RULEMAKING.—The Secretary shall 
utilize expedited rulemaking procedures to carry out this 
section. 
(m) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated such sums as may be 
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necessary for fiscal years 2006 and 2007 to carry out this 
section. 
Æ 
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