I 
113TH CONGRESS 
2D SESSION 
H. R. 4963 
To amend the Real Estate Settlement Procedures Act of 1974 to provide 
protections to borrowers, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 25, 2014 
Ms. MICHELLE LUJAN GRISHAM of New Mexico (for herself and Ms. KAPTUR) 
introduced the following bill; which was referred to the Committee on Fi-
nancial Services 
A BILL 
To amend the Real Estate Settlement Procedures Act of 
1974 to provide protections to borrowers, and for other 
purposes. 
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 ‘‘National Homeowners 
Bill of Rights Act of 2014’’. 
SEC. 2. SERVICER TREATMENT OF BORROWERS. 
The Real Estate Settlement Procedures Act of 1974 
(12 U.S.C. 2601 et seq.) is amended by inserting after 
section 6 the following: 
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‘‘SEC. 6A. SERVICER TREATMENT OF BORROWERS. 
‘‘(a) SERVICER REQUIREMENTS.— 
‘‘(1) SINGLE ELECTRONIC RECORD AND SINGLE 
POINT OF CONTACT.—Each servicer of a federally 
related mortgage loan, or agents of such servicer, 
shall, with respect to the borrower, establish a single 
electronic record for each account, the contents of 
which shall be accessible throughout the servicer, or 
agents of such servicer, including to all affordable 
loan modification staff, all foreclosure staff, and all 
bankruptcy staff. 
‘‘(2) AVAILABILITY
OF
NET
PRESENT
VALUE 
INFORMATION.—Servicers shall maintain a free and 
publicly accessible website where borrowers may 
check their estimated net present value. 
‘‘(b) PROTECTIONS FOR HOMEOWNERS WITH LIM-
ITED ENGLISH PROFICIENCY.— 
‘‘(1) FREE ORAL INTERPRETATION.—Servicers 
shall provide free oral interpretation services for bor-
rowers who request such services and such services 
may be provided by contracting with housing coun-
seling agencies that are approved by the Department 
of Housing and Urban Development and that have 
appropriate language capacity. 
‘‘(2) NOTATION IN FILE.—Servicers shall— 
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‘‘(A) note a request for translation services 
in the borrower’s file and make such note avail-
able to all relevant servicer personnel; and 
‘‘(B) note in the borrower’s file any time 
the borrower has communicated or sought to 
communicate with the servicer in a language 
other than English, and shall include such other 
language. 
‘‘(3) TRANSLATED DOCUMENTS.— 
‘‘(A) PROVIDING DOCUMENTS.— 
‘‘(i) IN GENERAL.—Servicers shall, if 
a borrower asks for translated documents, 
provide key documents to the borrower 
translated into the language of the bor-
rower, including periodic statements, af-
fordable loan modification applications, de-
nial notices, and loan modification offers, 
including any trial period plan. 
‘‘(ii) EXCEPTION.—Clause (i) shall 
only require providing documents in— 
‘‘(I) commonly spoken languages 
in the United States, as determined 
by the Bureau; 
‘‘(II) with respect to a particular 
servicer, languages spoken by a sig-
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nificant number of individuals living 
in any markets in which the servicer 
does business, as determined by the 
Bureau. 
‘‘(B) ACCEPTING
DOCUMENTS.—Servicers 
shall only be required to accept documents in 
languages in which the servicer already provides 
documents, that are considered to be part of 
routine business transactions in the market in 
which the mortgage loan was made, or that are 
used in documents provided to the public by 
any department or agency of the Federal Gov-
ernment. 
‘‘(4) EXCEPTION.—Subparagraph (A) of para-
graph (3) shall not apply to small servicers, as de-
fined under section 1026.41(e)(4)(ii) of title 12, 
Code of Federal Regulations. 
‘‘(c) REQUIREMENTS DURING AFFORDABLE LOAN 
MODIFICATION PROCESS.— 
‘‘(1) 
BORROWERS
FACING
IMMINENT
DE-
FAULT.—Servicers shall evaluate a borrower facing 
imminent default (as such term is defined by the 
Bureau), as well as those in default, for affordable 
loan modification assistance, as described in this sec-
tion. 
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‘‘(2) ASSISTANCE TO BORROWERS.— 
‘‘(A) ASSISTANCE IN APPLYING FOR AF-
FORDABLE
LOAN
MODIFICATION.—Servicers 
shall— 
‘‘(i) have available and sufficient staff 
to answer questions borrowers may have 
about filling out documents; and 
‘‘(ii) provide borrowers a list of non- 
profit legal services organizations and 
housing agencies approved by the Depart-
ment of Housing and Urban Development, 
that can assist the borrowers with docu-
ments. 
‘‘(B) TREATMENT OF SUCCESSORS IN IN-
TEREST.—Servicers shall— 
‘‘(i) provide full information and com-
plete loss mitigation options to successor 
homeowners protected from an acceleration 
of a mortgage loan under the Garn-St Ger-
main Depository Institutions Act of 1982, 
if requested by the successor homeowner; 
and 
‘‘(ii) review a mortgage loan for loss 
mitigation, as though the successor home-
owner was the borrower, and provide a de-
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cision on available loss mitigation prior to 
an assumption of the mortgage loan, if re-
quested by the succeeding homeowner. 
‘‘(3) AFTER
REVIEWING
APPLICATION.—If a 
servicer denies an application for an affordable loan 
modification, the servicer shall notify the borrower of 
other loss mitigation options that may be available 
to the borrower and shall consider the borrower for 
such other loss mitigation options. 
‘‘(4) RULE
OF
CONSTRUCTION.—Nothing in 
this section shall be construed as prohibiting a 
servicer from considering a borrower for other loss 
mitigation options, so long as the servicer first offers 
the borrower an affordable loan modification if the 
borrower is eligible for such a modification. 
‘‘(5) REQUIREMENTS RELATED TO TRANSFER 
OF LOANS.— 
‘‘(A) IN GENERAL.—For any transfer of 
servicing to a successor servicer of a federally 
related mortgage loan or subservicer, the trans-
ferring servicer shall— 
‘‘(i) inform the successor servicer (in-
cluding a subservicer) whether a loan 
modification request is pending; 
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‘‘(ii) provide the successor servicer 
with all documentation related to the mort-
gage loan, including any documentation re-
lating to a loan modification or loss mitiga-
tion process; 
‘‘(iii) 
ensure 
that 
the 
successor 
servicer has the operational capacity to 
manage the transferred loan; 
‘‘(iv) 
ensure 
that 
the 
successor 
servicer shall accept and continue proc-
essing prior loan modification requests, by 
including such requirement in the agree-
ment made between the servicers when 
transferring the loan; 
‘‘(v) ensure that successor servicer 
shall honor trial and permanent loan modi-
fication agreements entered into by the 
transferring servicer by including such re-
quirement in the agreement made between 
the servicers when transferring the loan; 
and 
‘‘(vi) notify the borrower of the trans-
ferred loan that the new servicer is re-
quired to accept and continue processing 
prior loan modification requests, if any, 
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and is required to honor trial and perma-
nent loan modification agreements entered 
into by the transferring servicer, if any. 
‘‘(B) HONORING OF EXISTING LOAN MODI-
FICATIONS AND APPLICATIONS IN PROCESS.— 
The successor servicer shall agree to honor and 
accept any existing loan modification and con-
tinue any loan modification applications. 
‘‘(C) PROHIBITION
ON
FORECLOSURE.— 
During the 60-day period beginning on the ef-
fective date of transfer of the servicing of any 
federally related mortgage loan, the mortgage 
loan subject to such transfer may not be subject 
to initiation of a judicial or non-judicial fore-
closure or be subject to a foreclosure sale. 
‘‘(d) SUBSEQUENT APPLICATIONS FOR AFFORDABLE 
LOAN MODIFICATION.—If a borrower has submitted an 
application or request in the past, the servicer shall allow 
such borrower to make a subsequent affordable loan modi-
fication application if the borrower experiences a material 
change in circumstances, as defined by the Bureau. 
‘‘(e) 
LIMITATION
ON
FORECLOSURE
PRO-
CEEDINGS.— 
‘‘(1) STOP OF SALES PENDING APPLICATION.— 
If a borrower submits an initial application for af-
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fordable loan modification assistance more than 7 
business days before a scheduled foreclosure sale, 
the servicer must stop and cancel the foreclosure 
sale. 
‘‘(2) INITIATION OF FORECLOSURE.—A servicer 
may not initiate or continue a nonjudicial foreclosure 
or a judicial foreclosure that is otherwise authorized 
under State law against a mortgagor that has sub-
mitted an initial application for an affordable loan 
modification or other loss mitigation, unless the 
servicer— 
‘‘(A) has determined whether the mort-
gagor is eligible for an affordable loan modifica-
tion; and 
‘‘(B) has made such a modification, if the 
mortgagor is eligible for a modification. 
‘‘(3) 
FORECLOSURE
PROCEEDINGS
PER-
MITTED.—Notwithstanding paragraph (2), a servicer 
may initiate or continue a judicial or nonjudicial 
foreclosure under State law against a borrower, if— 
‘‘(A) the servicer— 
‘‘(i) determines that the borrower is 
not eligible for a modification; 
‘‘(ii) notifies the borrower of the de-
termination under clause (i); and 
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‘‘(iii) provides the borrower— 
‘‘(I) a copy of any net present 
value calculation made by the servicer 
in relation to an affordable loan modi-
fication, including any information 
providing a basis for such net present 
value calculation; 
‘‘(II) a copy of any note, deed of 
trust, or other document necessary to 
establish the right of the servicer to 
foreclose on the mortgage, including 
proof of assignment of the mortgage 
to the servicer and the right of the 
servicer to enforce the relevant note 
under the law of the State in which 
the real property securing the mort-
gage is located; 
‘‘(III) a copy of any language in 
the pooling or servicing agreement 
with respect to the mortgage that the 
servicer relies upon in asserting that 
it is prohibited or limited in providing 
a modification of the mortgage note; 
‘‘(IV) a copy of all correspond-
ence between the servicer and the bor-
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rowers and investors in which the 
servicer attempts to obtain permission 
to make a modification; and 
‘‘(V) the alternatives to fore-
closure available to the borrower, in-
cluding deed in lieu of foreclosures 
and short sales; or 
‘‘(B) a borrower— 
‘‘(i) declines to be considered for a 
loan modification in writing or declines an 
affordable modification in writing; or 
‘‘(ii) does not respond to the servicer’s 
outreach activities (as defined by the Bu-
reau) to obtain underlying information to 
complete an application or fails to make a 
trial or permanent loan modification pay-
ment. 
For purposes of subparagraph (A), a ‘pooling and 
servicing agreement’ is any contract establishing the 
transaction rights and duties of the parties to any 
mortgage-backed securitization transaction. 
‘‘(4) BAR TO FORECLOSURE.—Failure to com-
ply with the requirements of this subsection shall be 
a bar to the foreclosure of a mortgage, deed of trust, 
or substantially similar instrument. 
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‘‘(5) FEES.— 
‘‘(A) WAIVER OF LATE FEES.—If a bor-
rower’s application for affordable loan modifica-
tion assistance is accepted, the servicer shall 
waive any foreclosure fees and any late fees re-
lated to the delinquency in payment. 
‘‘(B) NO FEE ACCRUAL WHILE APPLICA-
TION IS PENDING.—A borrower shall not accrue 
additional late or foreclosure fees during the pe-
riod beginning on the date that the borrower 
submits an affordable loan modification applica-
tion and the date on which the servicer makes 
a determination on such application. 
‘‘(6) NOTIFICATION.—With respect to a fore-
closure sale that is postponed by reason of this sub-
section, the servicer shall notify the borrower in 
writing of such postponement and, if a date for such 
foreclosure sale is rescheduled, shall notify the bor-
rower in writing of the new foreclosure sale date. 
‘‘(7) CERTIFICATION
OF
DETERMINATION
OF 
ELIGIBILITY REQUIRED FOR SALE.— 
‘‘(A) SALE OF PROPERTY PROHIBITED.—If 
the servicer of a mortgage does not file a cer-
tification with the appropriate land records of-
fice in the jurisdiction where the property se-
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curing the mortgage is located, stating that the 
servicer has determined the eligibility of the 
mortgagor for an affordable loan modification 
in compliance with this section— 
‘‘(i) the mortgagee may not sell the 
property securing the mortgage; and 
‘‘(ii) no person that purchases the 
property securing the mortgage may ini-
tiate an action to recover possession of the 
property. 
‘‘(B) VIOLATIONS.—A sale of property in 
violation of this paragraph shall be void. 
‘‘(8) INITIAL APPLICATION DEFINED.—For pur-
poses of this subsection, the term ‘initial application’ 
means a completed Uniform Borrower Assistance 
Form 710 of the Federal National Mortgage Asso-
ciation or the Federal Home Loan Mortgage Cor-
poration, a Request for Modification and Affidavit of 
the Making Home Affordable Program, or other 
equivalent form that sets forth the borrower’s finan-
cial, income, and hardship information and Form 
4506–T of the Internal Revenue Service. 
‘‘(f) AFFORDABLE LOAN MODIFICATIONS.— 
‘‘(1) AFFORDABLE
LOAN
MODIFICATION
DE-
FINED.—For purposes of this section, the term ‘af-
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fordable loan modification’ means an agreement to 
reduce the amount of scheduled regular payments, 
determined by the borrower’s debt-to-income ratio or 
residual income, and subject to such terms and con-
ditions as may be set by the Bureau, including any 
reduction of the principal amount of the mortgage 
note as described in paragraph (4), that is reflected 
in a permanent change to the terms of the mortgage 
note under such terms as the Bureau shall define. 
‘‘(2) CALCULATION
OF
TARGET
AFFORDABLE 
REGULAR
MORTGAGE
PAYMENT.—For purposes of 
this subsection, the target affordable regular mort-
gage payment shall be an amount determined by the 
borrower’s debt-to-income ratio or residual income, 
and subject to such terms and conditions as may be 
set by the Bureau, subject to such terms and condi-
tions as may be set by the Bureau. Such terms shall 
be based on a fully amortizing principal and interest 
payment over the remainder of the term of the mort-
gage, as modified by any reduction in principal. 
‘‘(3) ELIGIBILITY.—A mortgagor shall be eligi-
ble to participate in an affordable loan modification 
if— 
‘‘(A) such person is a borrower under a 
federally related loan secured by the principal 
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residence of the borrower or a person eligible to 
assume such a loan as a successor homeowner 
protected from an acceleration of a mortgage 
loan under the Garn-St Germain Depository In-
stitutions Act of 1982, who is unable to make 
payments on a federally related mortgage loan 
under such criteria as the Director of the Bu-
reau shall define, in consultation with the Sec-
retary of Housing and Urban Development and 
the Secretary of the Treasury; 
‘‘(B) such residence is occupied by the 
mortgagor; and 
‘‘(C) the loan modification has a positive 
net present value (as defined under paragraph 
(4)(B)(iv)(II)). 
‘‘(4) EARNED PRINCIPAL FORGIVENESS.— 
‘‘(A) IN
GENERAL.—If, after reducing 
mortgage note principal under earned principal 
forgiveness provided in subparagraph (B), a 
target affordable regular mortgage payment has 
not been achieved, the servicer of the mortgage 
shall comply with the affordable loan modifica-
tion plan waterfall steps as set out by the Bu-
reau of interest rate reduction, term extension, 
and principal forbearance, as necessary to 
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achieve a target affordable regular mortgage 
payment. 
‘‘(B) EARNED PRINCIPAL FORGIVENESS.— 
‘‘(i) 
PRINCIPAL
REDUCTION.—The 
Bureau shall determine standards by which 
a mortgagor who has received an afford-
able loan modification shall remain in good 
standing in order to participate in a reduc-
tion in mortgage note principal under this 
subsection. 
‘‘(ii) 
PRINCIPAL
REDUCTION
RE-
QUIRED.—Except as provided under clause 
(iii), a servicer shall offer a borrower an 
affordable loan modification having the 
maximum amount of principal reduction 
that results in a positive net present value 
calculation. For purposes of calculating net 
present value, a servicer may use their own 
formula, if it has been approved by the 
Bureau, or may use a default formula de-
termined by the Bureau. 
‘‘(iii) EXCEPTIONS.— 
‘‘(I) GREATER
PRINCIPAL
RE-
DUCTION.—A servicer may offer a 
greater principal reduction, if such a 
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reduction is consistent with the terms 
of any contract with respect to the 
mortgage. 
‘‘(II) LOAN-TO-VALUE RATIO.—A 
servicer is not required to offer a 
principal reduction that would result 
in a loan-to-value ratio of less than 
100 percent. 
‘‘(iv) RULES OF CONSTRUCTION.— 
‘‘(I) MAXIMUM AMOUNT OF PRIN-
CIPAL
REDUCTION.—A principal re-
duction amount may be considered the 
maximum amount if it is within 
$1,000 
of 
the 
actual 
maximum 
amount. 
‘‘(II) POSITIVE
NET
PRESENT 
VALUE CALCULATION.—A net present 
value calculation shall be deemed to 
be ‘positive’ for the mortgage inves-
tors if the net present value result for 
an affordable loan modification sce-
nario is greater than the net present 
value result if no affordable loan 
modification is made. Net present 
value shall be calculated as the benefit 
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of all investors in a securitization 
rather than the benefit of any par-
ticular class of investors. 
‘‘(v) PRINCIPAL FORGIVENESS.— 
‘‘(I) TREATMENT OF PRINCIPAL 
REDUCTION
AMOUNT.—Any amount 
of principal reduction under clause (ii) 
shall be treated as non-interest-bear-
ing principal forbearance until the 
dates described under subclause (II). 
The principal reduction described in 
this clause shall be deemed to be sepa-
rate from and exclusive of any other 
forbearance that may be offered in 
conjunction with a modification under 
an affordable loan modification pro-
gram. 
‘‘(II) 
REDUCTION
OF
PRIN-
CIPAL.—The servicer of a mortgage 
modified under an affordable loan 
modification plan shall reduce the un-
paid balance of the principal of the 
mortgage by an amount equal to 1⁄3 of 
the total amount of the principal re-
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duction under clause (ii) on each of 
the following dates: 
‘‘(aa) The date that is 1 
year after the date on which the 
affordable loan modification be-
gins. 
‘‘(bb) The date that is 2 
years after the date on which the 
affordable loan medication be-
gins. 
‘‘(cc) The date that is 3 
years after the date on which the 
affordable loan modification be-
gins. 
‘‘(vi) 
CERTAIN
MODIFICATIONS.— 
With respect to a borrower that is not un-
derwater and does not qualify for principle 
reduction, the servicer shall offer such bor-
rower an affordable loan modification to 
reach the target affordable regular mort-
gage payment amount, if the borrower 
qualifies. 
‘‘(5) TREATMENT OF JUNIOR LIENS.—With re-
spect to a borrower, if a primary mortgage loan is 
modified pursuant to this subsection, the servicer of 
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any junior mortgage loan shall make a modification 
available to the borrower on the same terms as the 
modification of the primary mortgage loan, unless 
prohibited by contract. 
‘‘(6) RULE
OF
CONSTRUCTION.—Nothing in 
this section shall be construed as prohibiting a 
servicer from providing a loan modification that does 
not produce a positive net present value (as defined 
under paragraph (4)(B)(iv)(II)). 
‘‘(g) BAR TO FORECLOSURE.—In any judicial or non- 
judicial foreclosure proceeding, it shall be a bar to fore-
closure that the servicer of the federally related mortgage 
loan on the property to be foreclosed violated any provision 
of this section. 
‘‘(h) CIVIL PENALTY.— 
‘‘(1) IN GENERAL.—Any servicer who violates a 
provision of this section shall be subject to a fine in 
an amount, as determined by the Bureau, not to ex-
ceed $5,000 for each violation except that the max-
imum penalty for all violations by any particular 
servicer during any 1-year period shall not exceed 
$1,000,000. 
‘‘(2) LIABILITY TO BORROWER.—Any servicer 
that violates a provision of this section with respect 
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to a loan shall be liable to the borrower of such loan 
in the amount of $10,000 per violation. 
‘‘(3) CONTINUING VIOLATIONS.—In the case of 
a continuing violation, as determined by the Bureau, 
each day shall constitute a separate violation for 
purposes of this subsection. 
‘‘(4) ADJUSTMENT
OF
AMOUNTS.—After the 
end of the 1-year period beginning on the date of the 
enactment of this subsection, the Bureau shall annu-
ally adjust amounts specified under this subsection 
to reflect inflation. 
‘‘SEC. 6B. MORTGAGE SERVICER OMBUDSMAN. 
‘‘(a) IN GENERAL.—The Director of the Bureau shall 
appoint a Mortgage Servicer Ombudsman (the ‘Ombuds-
man’) within the Bureau. 
‘‘(b) DUTIES.—The Ombudsman shall provide assist-
ance to servicers and borrowers in complying with Federal 
law with respect to the servicing of mortgage loans and 
offer resolution to borrowers who are facing noncompli-
ance. 
‘‘(c) FOCUS ON LOW-INCOME BORROWERS.—In car-
rying out this section, the Ombudsman shall focus on pro-
viding assistance to low-income borrowers. 
‘‘(d) CONSULTATION.—The Ombudsman shall con-
sult with— 
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‘‘(1) attorneys general of States in carrying out 
this section; and 
‘‘(2) other offices of the Bureau that engage in 
dispute resolution. 
‘‘(e) NON-DUPLICATION.—The Ombudsman may not 
carry out any activities that would be duplicative with ac-
tivities of other Bureau offices. 
‘‘SEC. 6C. PENALTIES FOR ROBO-SIGNING. 
‘‘Any servicer who records or files with a land records 
office or a court more than one document with material 
deficiencies with respect to a mortgage loan shall be sub-
ject to a fine of not more than $7,500 for each such 
loan.’’. 
SEC. 3. EXTENSION OF THE PROTECTING TENANTS AT 
FORECLOSURE ACT OF 2009. 
Section 704 of the Protecting Tenants at Foreclosure 
Act of 2009 (12 U.S.C. 5201 note; 12 U.S.C. 5220 note; 
42 U.S.C. 1437f note) is hereby repealed. 
SEC. 4. RULE OF CONSTRUCTION. 
Nothing in this Act, or the amendments made by this 
Act, shall be construed as preempting any State or local 
law with respect to foreclosures that provides greater pro-
tections for consumers. 
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SEC. 5. RULEMAKING. 
The Bureau of Consumer Financial Protection shall, 
not later than the end of the 12-month period beginning 
on the date of the enactment of this Act, issue regulations 
to carry out this Act and the amendments made by this 
Act, and the Bureau shall provide that such regulations 
take effect not later than the end of the 6-month period 
beginning on the date the regulations are issued. 
Æ 
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