rights and duties of the parties to any mortgage-backed 
securitization transaction. 
‘‘(b) COMPENSATION.—The rules of the Commission 
under this section shall include a definition of the term 
‘compensation’ to mean any financial remuneration, in-
cluding salary, bonuses, incentives, benefits, severance, de-
ferred compensation, or golden parachute benefits, and 
any profits realized from the sale of the securities of the 
company.’’. 
SEC. 5. LIMITATION ON MORTGAGES HELD BY LOAN 
SERVICERS. 
(a) LIMITATION.—The Truth in Lending Act (15 
U.S.C. 1631 et seq.) is amended by inserting before sec-
tion 130 (15 U.S.C. 1640) the following new section: 
‘‘SEC. 129I. LIMITATIONS ON MORTGAGES HELD BY LOAN 
SERVICERS. 
‘‘(a) LIMITATION.—Neither the servicer of a 
securitized residential mortgage loan, nor any affiliate of 
such servicer, may own, or hold any interest in, any other 
residential mortgage loan that is secured by a mortgage, 
deed of trust, or other equivalent consensual security in-
terest on the same dwelling or residential real property 
that is subject to the mortgage, deed of trust, or other 
security interest that secures the securitized residential 
mortgage loan serviced by the servicer. 
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‘‘(b) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
‘‘(1) AFFILIATE.—The term ‘affiliate’ means, 
with respect to a servicer, any person or entity that 
controls, is controlled by, or is under common con-
trol with such servicer, as the Board shall prescribe 
by regulation. 
‘‘(2) RESIDENTIAL
MORTGAGE
LOAN.—The 
term ‘residential mortgage loan’ means any con-
sumer credit transaction that is secured by a mort-
gage, deed of trust, or other equivalent consensual 
security interest on a dwelling or on residential real 
property that includes a dwelling, other than a con-
sumer credit transaction under an open end credit 
plan or an extension of credit relating to a plan de-
scribed in section 101(53D) of title 11, United 
States Code. 
‘‘(3) SECURITIZED
RESIDENTIAL
MORTGAGE 
LOAN.—The term ‘securitized residential mortgage 
loan’ means any residential mortgage loan that 
serves as collateral for a fixed-income or other secu-
rity that allows the holder of such security to receive 
payments dependent on the cash flow from such res-
idential mortgage loan. 
‘‘(4) SERVICER.—The term ‘servicer’— 
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‘‘(A) has the meaning provided in section 
129A, except that such term includes a person 
who receives any payments from a mortgagor, 
including any amounts for escrow accounts, and 
makes payments to the owner of the loan or 
other third parties, including payments made 
after default, pursuant to the terms of the rel-
evant contracts; and 
‘‘(B) excludes State and local housing 
agencies. 
‘‘(c) INTERESTS.—For purposes of subsection (a), 
ownership of, or holding an interest in a securitized resi-
dential mortgage loan includes ownership of, or holding 
an interest in— 
‘‘(1) a pool of securitized residential mortgage 
loans that contains such securitized residential mort-
gage loan; or 
‘‘(2) any security based on or backed by a pool 
of securitized residential mortgage loans that con-
tains such securitized residential mortgage loan.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 2 of the Truth in Lending Act is amended 
by inserting before the item relating to section 130 the 
following new item: 
‘‘Sec. 129I. Limitations on mortgages held by loan servicers.’’. 
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(c) APPLICABILITY.—The amendment made by sub-
section (a) shall apply— 
(1) with respect to the servicer (or affiliate of 
the servicer) of a residential mortgage loan that is 
originated after the date of enactment of this Act, 
on such date of enactment; and 
(2) with respect to the servicer (or affiliate of 
the servicer) of a residential mortgage loan that is 
originated on or before the date of enactment of this 
Act, upon the expiration of the 12-month period be-
ginning on such date of enactment. 
(d) ENFORCEMENT PROVISIONS.—Section 130 of the 
Truth in Lending Act (15 U.S.C. 1640) is amended by 
adding at the end the following: 
‘‘(m) SERVICERS.—This section shall apply to 
servicers (as that term is defined in section 129I) in the 
same manner, and to the same extent as it applies to 
creditors.’’. 
SEC. 6. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 
1974 IMPROVEMENTS. 
(a) RESPA FEES AND RESTRICTIONS.—Section 8 of 
the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2607) is amended by adding at the end the fol-
lowing new subsections: 
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‘‘(e) FEES
TO
BE
REASONABLY
RELATED
TO 
COSTS.—All fees charged for the rendering of a real estate 
settlement service in connection with a transaction involv-
ing a federally related mortgage loan or incurred in con-
nection with servicing such loan shall be reasonably re-
lated to the cost of providing the service. 
‘‘(f) RESTRICTION ON USE OF SUBSIDIARIES AND 
INSOURCING.— 
‘‘(1) IN GENERAL.—No servicer of a residential 
mortgage loan shall render a real estate settlement 
service in connection with a transaction involving a 
federally related mortgage loan through a subsidiary 
of such person or through insourcing. 
‘‘(2) INSOURCING DEFINED.—For purposes of 
this subsection, the term ‘insourcing’ means pro-
viding for services to be conducted by the servicer’s 
affiliated entities.’’. 
(b) FORCE-PLACED INSURANCE.—Section 6 of the 
Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2605) is amended— 
(1) in subsection (l), by adding at the end the 
following new paragraph: 
‘‘(5) REQUIREMENT
TO
CONTINUE
INSUR-
ANCE.—If a borrower’s insurance policy has not 
been paid, the servicer shall make payments on the 
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current policy or seek reinstatement of such policy 
where necessary and then make such payments, un-
less the policy has been terminated for reasons other 
than nonpayment. Where escrow funds are not avail-
able, the servicer shall advance such funds. If the 
current policy cannot be continued and force-placed 
insurance is provided, the costs and the coverage 
should be substantially equivalent to that provided in 
a standard homeowner’s insurance policy.’’; 
(2) by adding at the end the following new sub-
section: 
‘‘(n) DISCLOSURES RELATED TO INSURANCE COV-
ERAGE INFORMATION.— 
‘‘(1) NOTICE.—Each servicer of a federally re-
lated mortgage loan shall notify the borrower of 
such loan that the borrower is required to disclose 
to the servicer the borrower’s property insurance 
coverage information. 
‘‘(2) DISCLOSURE.—Each borrower who re-
ceives a notice described under paragraph (1) shall 
disclose such information to the servicer.’’. 
(c) LOSS MITIGATION.—Section 6 of the Real Estate 
Settlement Procedures Act of 1974 (12 U.S.C. 2605), as 
amended by subsection (b), is further amended by adding 
at the end the following new subsection: 
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‘‘(o) LOSS MITIGATION.— 
‘‘(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) a single electronic record for each ac-
count, the contents of which shall be accessible 
throughout the servicer, or agents of such 
servicer, including to all loss mitigation staff, 
all foreclosure staff, and all bankruptcy staff; 
and 
‘‘(B) a single point of contact for the bor-
rower for all loss mitigation activities. 
‘‘(2) GENERAL
LOSS
MITIGATION
REQUIRE-
MENTS.—Each servicer of a federally related mort-
gage loan, or agents of such servicer, shall— 
‘‘(A) maintain adequate staffing and sys-
tems for tracking borrower documents and in-
formation that are relevant to foreclosure, loss 
mitigation, bankruptcy, and other servicing op-
erations; 
‘‘(B) maintain adequate staffing and case-
load limits for employees responsible for han-
dling foreclosure, loss mitigation, bankruptcy, 
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and related communication with borrowers and 
housing counselors; 
‘‘(C) set reasonable minimum experience, 
education, and training requirements for loan 
modification staff; and 
‘‘(D) document electronically each action 
on a foreclosure, loan modification, bankruptcy, 
or other servicing file, including all communica-
tion with the borrower and other parties. 
‘‘(3) TEAM LEADERS.—Each servicer of a fed-
erally related mortgage loan shall establish a single 
individual to coordinate the servicer’s departments 
handling the activities described under subpara-
graphs (A), (B), and (C) under paragraph (2). 
‘‘(4) LIMIT ON EMPLOYEE ACTIVITIES.—With 
respect to employees of a servicer of a federally re-
lated mortgage loan who handle delinquent loans or 
mandatory special servicers, the Bureau shall issue 
regulations setting a reasonable limit on the number 
of cases that may be handled by each such employee. 
‘‘(5) MANDATORY
SPECIAL
SERVICER
DE-
FINED.—For purposes of this subsection, the term 
‘mandatory special servicer’ has the meaning given 
such term in section 15H(a)(6) of the Securities Ex-
change Act of 1934. 
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‘‘(6) ADDITIONAL REQUIREMENTS RELATED TO 
TRANSFER OF LOANS.— 
‘‘(A) TO SUCCESSOR SERVICERS.—For any 
ordinary transfer of servicing to a successor 
servicer of a federally related mortgage loan or 
subservicer, the transferring servicer shall— 
‘‘(i) inform the successor servicer (in-
cluding a subservicer) whether a loan 
modification is pending; 
‘‘(ii) ensure that the successor servicer 
shall accept and continue processing prior 
loan modification requests; and 
‘‘(iii) ensure that successor servicer 
shall honor trial and permanent loan modi-
fication agreements entered into by the 
transferring servicer. 
‘‘(B) 
TO
MANDATORY
SPECIAL 
SERVICERS.—A servicer of a federally related 
mortgage loan shall refer any loan that is 60 or 
more days delinquent to an independent manda-
tory special servicer or subservicer who shall 
agree to the loss mitigation requirements of this 
subsection.’’. 
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(d) APPLICATION OF PAYMENTS.—Section 6(k)(1) of 
the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2605(k)) is amended— 
(1) in subparagraph (D), by striking ‘‘or’’ at 
the end; 
(2) in subparagraph (E), by striking the period 
and inserting ‘‘; or’’; and 
(3) by adding at the end the following new sub-
paragraph: 
‘‘(F) apply payments, including partial 
payments, made by a borrower to any fees be-
fore first applying such payments to any out-
standing scheduled principal or interest pay-
ments.’’. 
(e) MONTHLY SERVICING STATEMENTS.—Section 6 
of the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2605), as amended by subsection (c), is further 
amended by adding at the end the following new sub-
section: 
‘‘(p) MONTHLY SERVICING STATEMENTS.—The Bu-
reau shall issue regulations requiring each servicer of a 
federally related mortgage loan to provide borrowers with 
a monthly servicing statement that clearly describes— 
‘‘(1) the payment amounts due under the loan 
agreement; 
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‘‘(2) the date and time when such payments 
must be received; 
‘‘(3) the location where such payments must be 
received; and 
‘‘(4) a list of each payment received by the 
servicer, along with how such payment was allocated 
to the amounts owed by the borrower.’’. 
(f) UNFAIR AND DECEPTIVE ACTS OR PRACTICES 
VIOLATIONS.—Section 19 of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2617) is amended by 
adding at the end the following new subsection: 
‘‘(e) AUTHORITY OF THE BUREAU WITH RESPECT 
TO UDAP VIOLATIONS.—The Bureau’s authority with re-
spect to unfair and deceptive acts or practices by servicers 
of federally related mortgage loans shall be the same as 
its authority with respect to unfair and deceptive acts or 
practices under the Consumer Financial Protection Act of 
2010. Notwithstanding such authority, the following shall 
apply: 
‘‘(1) SERVICE.—The Bureau shall provide the 
servicer in violation with notification of such viola-
tion via personal service and such notification shall 
include a notice of the servicer’s rights and any bond 
requirements the servicer may be subject to by rea-
son of such violation. 
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‘‘(2) 
DAMAGES.—Notwithstanding 
amounts 
specified under the Federal Trade Commission Act, 
a servicer convicted of unfair and deceptive acts or 
practices with respect to a federally related mort-
gage loan shall be— 
‘‘(A) fined, regardless of whether there was 
a pattern or practice of such violations, statu-
tory damages of not more than $10,000 for 
each such violation (such amount to be adjusted 
annually beginning 1 year after the date of en-
actment of the Foreclosure Fraud and Home-
owner Abuse Prevention Act of 2011 by the 
percentage corresponding to the annual percent-
age increase in the Consumer Price Index for 
all urban consumers); 
‘‘(B) required to pay all actual damages, 
including emotional distress, regardless of 
whether there was detrimental reliance on the 
part of the borrower; and 
‘‘(C) liable for attorneys fees. 
‘‘(3) BAR TO FORECLOSURE.—In any judicial 
or non-judicial foreclosure proceeding, it shall be a 
bar to foreclosure that the servicer of the federally 
related mortgage loan on the property to be fore-
closed violated any provision of this section. 
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‘‘(4) STATUTE OF LIMITATIONS.—The statute 
of limitations for a servicer’s violation of unfair and 
deceptive acts or practices laws with respect to a 
federally related mortgage loan shall be 3 years from 
the date on which violation occurs.’’. 
SEC. 7. TRANSFER NOTIFICATION UNDER TILA. 
(a) IN GENERAL.—Section 131(g) of the Truth in 
Lending Act (15 U.S.C. 1641(g)) is amended— 
(1) in paragraph (1), by inserting ‘‘, including 
any servicer with respect to a securitized residential 
mortgage loan,’’ before ‘‘shall notify’’; and 
(2) by striking paragraph (2) and inserting the 
following: 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) the term ‘mortgage loan’ means any 
consumer credit transaction that is secured by 
the principal dwelling of a consumer; and 
‘‘(B) the terms ‘servicer’ and ‘securitized 
residential mortgage loan’ have the same mean-
ings as in section 129I(b).’’. 
(b) SAFE
HARBOR
FOR
MISTAKEN
PAYMENTS; 
FEES.—Section 131 of the Truth in Lending Act (15 
U.S.C. 1641) is amended— 
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(1) by redesignating subsection (g) as sub-
section (i); and 
(2) by inserting after subsection (f) the fol-
lowing: 
‘‘(g) TREATMENT OF MISTAKEN LOAN PAYMENTS 
AFTER TRANSFER.—During the 60-day period beginning 
on the effective date of transfer of the servicing of any 
securitized residential mortgage loan, a late fee may not 
be imposed on the consumer with respect to any payment 
on such loan, and no such payment may be treated as late 
for any other purpose, if the payment is received by the 
transferor servicer (rather than the transferee servicer 
who should properly receive payment) before the due date 
applicable to such payment. 
‘‘(h) FEE WAIVERS UPON TRANSFER.— 
‘‘(1) IN
GENERAL.—A creditor, including a 
servicer, may not impose or collect— 
‘‘(A) any fee that is not listed as having 
been incurred in— 
‘‘(i) the notice to the consumer of the 
transfer of a securitized residential mort-
gage loan from the previous creditor or 
servicer; or 
‘‘(ii) the notice to the consumer from 
the new creditor or servicer; or 
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‘‘(B) any fee that is not specified on the 
monthly statement to the consumer as having 
been incurred. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the terms ‘servicer’ and ‘securitized residen-
tial mortgage loan’ have the same meanings as in 
section 129I(b).’’. 
SEC. 8. LOAN MODIFICATIONS; DUAL TRACK PROCEEDINGS 
PROHIBITED. 
(a) IN GENERAL.—Section 129A of the Truth in 
Lending Act (as such section is redesignated by section 
1402(a)(1) of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act) is amended— 
(1) by redesignating subsections (f) and (g) as 
subsections (h) and (i), respectively; 
(2) in subsection (i), as so redesignated— 
(A) 
by 
redesignating 
paragraphs 
(1) 
through (3) as paragraphs (2) through (4), re-
spectively; and 
(B) by inserting before paragraph (2), as 
so redesignated, the following: 
‘‘(1) the term ‘affordable loan modification’ 
means an agreement to reduce the amount of sched-
uled regular payments under a mortgage note, in-
cluding any reduction of the principal amount of the 
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mortgage note, that is reflected in a permanent 
change to the terms of the mortgage note under 
such terms as the Bureau of Consumer Financial 
Protection shall define.’’; and 
(3) by inserting after subsection (e) the fol-
lowing: 
‘‘(f) 
LIMITATION
ON
FORECLOSURE
PRO-
CEEDINGS.— 
‘‘(1) INITIATION OF FORECLOSURE.—A servicer 
may not initiate or continue a nonjudicial foreclosure 
or a judicial foreclosure against a mortgagor that is 
otherwise authorized under State law, 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. 
‘‘(2) 
FORECLOSURE
PROCEEDINGS
PER-
MITTED.—Notwithstanding paragraph (1), a servicer 
may initiate or continue a judicial or nonjudicial 
foreclosure under State law against a mortgagor, 
if— 
‘‘(A) the servicer— 
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‘‘(i) determines that the mortgagor is 
not eligible for a modification; 
‘‘(ii) notifies the mortgagor of the de-
termination under clause (i); and 
‘‘(iii) provides the mortgagor— 
‘‘(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 mortgagee to 
foreclose on the mortgage, including 
proof of assignment of the mortgage 
to the mortgagee and the right of the 
mortgagee 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 
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servicer believes prevents a modifica-
tion of the mortgage note; 
‘‘(IV) a copy of all correspond-
ence between the servicer and the 
mortgagees and investors in which the 
servicer attempts to obtain permission 
to make a modification; 
‘‘(V) a complete and unaltered 
copy of the pooling or servicing agree-
ment in electronic format; and 
‘‘(VI) the alternatives to fore-
closure available to the mortgagor, in-
cluding deed in lieu of foreclosures 
and short sales; or 
‘‘(B) a mortgagor— 
‘‘(i) declines an affordable modifica-
tion in writing; or 
‘‘(ii) does not respond to the servicer’s 
outreach activities (as defined by the Sec-
retary of Housing and Urban Develop-
ment) to obtain underlying information to 
complete an application or obtain consent 
to an affordable modification. 
For purposes of subparagraph (A), a ‘pooling and 
servicing agreement’ is any contract establishing the 
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transaction rights and duties of the parties to any 
mortgage-backed securitization transaction. 
‘‘(3) 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. 
‘‘(4) ELIGIBILITY.—A mortgagor shall be eligi-
ble to participate in an affordable loan modification 
program if— 
‘‘(A) such person is a mortgagor under a 
federally related loan secured by the principal 
residence of the mortgagor, or is eligible to as-
sume such a federally related mortgage loan, 
who is unable to make payments on a federally 
related mortgage loan under such criteria as 
the Director of the Bureau of Consumer Finan-
cial Protection shall define, in consultation with 
the Secretary of Housing and Urban Develop-
ment and the Secretary of the Treasury; and 
‘‘(B) they are not an individual who has 
abandoned the principal residence securing the 
federally related mortgage loan. 
‘‘(5) CERTIFICATION
OF
DETERMINATION
OF 
ELIGIBILITY REQUIRED FOR SALE.— 
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‘‘(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-
curing the mortgage is located, stating that the 
servicer has determined the eligibility of the 
mortgagor for an affordable loan modification— 
‘‘(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. 
‘‘(C) CONTENTS.—The Director of the Bu-
reau of Consumer Financial Protection shall, by 
rule, determine the contents of the certification 
required under this subsection. 
‘‘(g) EARNED PRINCIPAL FORGIVENESS.— 
‘‘(1) IN GENERAL.—If, after reducing mortgage 
note principal under earned principal forgiveness 
provided in paragraph (2), a target affordable reg-
ular mortgage payment has not been achieved, the 
servicer of the mortgage shall comply with the af-
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fordable loan modification plan modification water-
fall steps of interest rate reduction, term extension, 
and principal forbearance, as necessary to achieve a 
target affordable regular mortgage payment. 
‘‘(2) EARNED PRINCIPAL FORGIVENESS.— 
‘‘(A) PRINCIPAL
REDUCTION.—The Bu-
reau shall determine standards by which a 
mortgagor who has received an affordable loan 
modification shall remain in good standing in 
order to participate in a reduction in mortgage 
note principal under this subsection. 
‘‘(B) PRINCIPAL REDUCTION REQUIRED.— 
Except as provided under subparagraph (C), a 
servicer shall offer a mortgager an affordable 
loan modification having the maximum amount 
of principal reduction that results in a positive 
net present value calculation. 
‘‘(C) EXCEPTIONS.— 
‘‘(i) GREATER
PRINCIPAL
REDUC-
TION.—A servicer may offer a greater 
principal reduction, if such a 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 an afford-
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able loan modification having a principal 
reduction that would result in a loan-to- 
value ratio of less than 100 percent. 
‘‘(D) RULES OF CONSTRUCTION.— 
‘‘(i) MAXIMUM AMOUNT OF PRINCIPAL 
REDUCTION.—A 
principal 
reduction 
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 cal-
culation shall be deemed to be ‘positive’ if 
the net present value result for an afford-
able loan modification scenario is greater 
than the net present value result if no af-
fordable loan modification is made. Net 
present value shall be calculated as the 
benefit of all investors in a securitization 
rather than the benefit of any particular 
class of investors. 
‘‘(E) PRINCIPAL FORGIVENESS.— 
‘‘(i) TREATMENT OF PRINCIPAL RE-
DUCTION AMOUNT.—Any amount of prin-
cipal reduction under subparagraph (B) 
shall be treated as non-interest-bearing 
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principal forbearance until the dates de-
scribed under clause (ii). The principal re-
duction described in this subparagraph 
shall be deemed to be separate from and 
exclusive of any other forbearance that 
may be offered in conjunction with a modi-
fication under an affordable loan modifica-
tion program. 
‘‘(ii) REDUCTION OF PRINCIPAL.—The 
servicer of a mortgage modified under an 
affordable loan modification plan shall re-
duce the unpaid balance of the principal of 
the mortgage by an amount equal to 1⁄3 of 
the total amount of the principal reduction 
under subparagraph (B) on each of the fol-
lowing dates: 
‘‘(I) The date that is 1 year after 
the date on which the affordable loan 
modification begins. 
‘‘(II) The date that is 2 years 
after the date on which the affordable 
loan medication begins. 
‘‘(III) The date that is 3 years 
after the date on which the affordable 
loan modification begins. 
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‘‘(iii) LIMITATION.—The Bureau may 
not require a servicer to reduce mortgage 
note principal to an amount that is less 
than the market value of the property se-
curing the mortgage at the time of the re-
duction in principal. 
‘‘(3) CALCULATION
OF
TARGET
AFFORDABLE 
REGULAR
MORTGAGE
PAYMENT.—For purposes of 
this subsection, the target affordable regular mort-
gage payment shall be calculated under such terms 
as the Bureau shall define. Such terms shall— 
‘‘(A) be based on a fully amortizing prin-
cipal and interest payment over the remainder 
of the term of the mortgage, as modified by a 
reduction in principal; and 
‘‘(B) use the mortgage note interest rate in 
effect at the time of a reduction in principal. 
‘‘(4) TREATMENT OF SUBORDINATE LIENS.— 
The Bureau shall prescribe rules establishing proce-
dures governing the treatment of any whole loan 
owned by the creditor (or any of its affiliates) and 
secured by a subordinate lien on a property owned 
by a mortgagor participating in an affordable loan 
modification program.’’. 
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SEC. 9. FAIR DEBT COLLECTION PRACTICES ACT AMEND-
MENTS. 
(a) APPLICABILITY TO SERVICERS.—Section 803 of 
the Fair Debt Collection Practices Act (15 U.S.C. 1692a) 
is amended— 
(1) in paragraph (6), by inserting before ‘‘The 
term does not’’ the following: ‘‘The term includes 
any servicer of a securitized residential mortgage 
loan who uses any instrumentality of interstate com-
merce or the mails in the collection of any debts in 
relation to any such securitized residential mortgage 
loan.’’; and 
(2) by adding at the end the following: 
‘‘(9) SECURITIZED
RESIDENTIAL
MORTGAGE 
LOAN.—The term ‘securitized residential mortgage 
loan’ means any residential mortgage loan that 
serves as collateral for a fixed-income or other secu-
rity that allows the holder of such security to receive 
payments dependent on the cash flow from such res-
idential mortgage loan. 
‘‘(10) SERVICER.—The term ‘servicer’— 
‘‘(A) means any person responsible for the 
management 
or 
collection 
of 
a 
pool 
of 
securitized residential mortgage loans or mak-
ing allocations or distributions to holders of 
asset-backed securities; and 
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‘‘(B) does not include any State or local 
housing agency.’’. 
(b) CIVIL LIABILITY.—Section 813 of the Fair Debt 
Collection Practices Act (15 U.S.C. 1692k) is amended 
by adding at the end the following: 
‘‘(f) Any debt collector that violates any provision of 
this title with respect to a debt secured by the residence 
of the consumer shall be liable to such consumer in the 
amount of $10,000 per violation. 
‘‘(g) After the end of the 1-year period beginning on 
the date of the enactment of this subsection, amounts of 
penalties specified under this section shall be annually ad-
justed to reflect inflation.’’. 
(c) RULEMAKING.—The Bureau of Consumer Finan-
cial Protection shall, not later than 270 days after the 
date of enactment of this Act, issue rules to carry out the 
amendments made by this section. 
SEC. 10. REGULATION OF SERVICER AFFILIATES BY BANK-
ING AGENCIES. 
(a) CAPITAL RESERVE STANDARDS.—Each of the ap-
propriate Federal banking agencies (as defined in section 
3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) 
shall promulgate regulations to establish independent cap-
ital reserve standards for any servicer of a federally re-
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lated mortgage that is affiliated with a financial institu-
tion that is subject to regulation by that agency. 
(b) TREATMENT OF DELINQUENT LOANS.— 
(1) IN
GENERAL.—The Securities and Ex-
change Commission shall issue regulations to provide 
that, for purposes of generally accepted accounting 
principles, any federally related mortgage loan that 
is 120 days or more delinquent and that has not 
been the subject of a modification or a debt restruc-
turing, as provided in section 129A of the Truth in 
Lending Act shall be marked to market. 
(2) INSURED DEPOSITORY INSTITUTION TREAT-
MENT.—An appropriate Federal banking agency (as 
defined under section 3 of the Federal Deposit In-
surance Act (12 U.S.C. 1813)) may not find the reg-
ulations issues pursuant to paragraph (1) to be in-
consistent with the objectives described under sec-
tion 37(a)(1) of the Federal Deposit Insurance Act 
(12 U.S.C. 1831n(a)(1)). 
Æ 
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