Title: Homeowner Mortgage Servicing Fairness Act of 2018
Policy area: Housing and Community Development

Summary:
Homeowner Mortgage Servicing Fairness Act of 2018
This bill provides for the establishment of mortgage-servicer oversight standards by the Federal Housing Finance Agency.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6102 Introduced in House (IH)]

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115th CONGRESS
  2d Session
                                H. R. 6102

 To provide for the Director of the Federal Housing Finance Agency to 
 establish prudential management and operations standards for mortgage 
                   servicers, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 14, 2018

 Ms. Maxine Waters of California introduced the following bill; which 
          was referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
 To provide for the Director of the Federal Housing Finance Agency to 
 establish prudential management and operations standards for mortgage 
                   servicers, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Homeowner Mortgage Servicing 
Fairness Act of 2018''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds that--
            (1) mortgage servicing plays a critical role in determining 
        the likelihood that a delinquent borrower will be able to save 
        their home from foreclosure, but homeowners do not have the 
        ability to choose their mortgage servicers;
            (2) a 2011 Yale Journal on Regulation article written by 
        Adam Levitin and Tara Twomey, entitled ``Mortgage Servicing'', 
        confirmed that borrowers have no control over what bank or non-
        bank entity services their mortgage loan, whether the servicing 
        rights on their mortgage are transferred to a new entity, or 
        what contractual provisions govern the servicing of their 
        mortgage loan;
            (3) a 2011 report entitled ``Interagency Review of 
        Foreclosure Policies and Practices'' conducted by the Federal 
        Reserve System, the Office of the Comptroller of the Currency, 
        and the Office of Thrift Supervision acknowledged that ``a 
        number of supervisory actions and industry reforms are required 
        to address [weaknesses in foreclosure process governance] in a 
        way that will hold servicers accountable for establishing 
        necessary governance and controls'';
            (4) there has been abundant evidence since the financial 
        crisis of 2007 to 2009 that has indicated that some single-
        family housing mortgage servicers are failing to provide 
        mortgage borrowers with the protections against foreclosure 
        that they are entitled to by law, including failure to provide 
        mortgage borrowers with critical information about the process 
        of applying for foreclosure relief and loan modifications;
            (5) multiple congressional hearings have uncovered 
        additional evidence of failures in mortgage servicing, 
        including--
                    (A) the hearing of the Committee on Financial 
                Services of the House of Representatives entitled ``A 
                Review of Mortgage Servicing Practices and Foreclosure 
                Mitigation'', July 25, 2008 (Serial No. 110-132);
                    (B) the hearing of the Subcommittee on Insurance, 
                Housing, and Community Opportunity of the Committee on 
                Financial Services of the House of Representatives 
                entitled ``Robo-Signing, Chain of Title, Loss 
                Mitigation and Other Issues in Mortgage Servicing'', 
                November 18, 2010 (Serial No. 111-166); and
                    (C) the joint hearing of the Subcommittee on 
                Financial Institutions and Consumer Credit and the 
                Subcommittee on Oversight and Investigations of the 
                Committee on Financial Services of the House of 
                Representatives entitled ``Mortgage Servicing: An 
                Examination of the Role of Federal Regulators in 
                Settlement Negotiations and the Future of Mortgage 
                Servicing Standards'', July 7, 2011 (Serial No. 112-
                44);
            (6) in view of the heightened reliance by the Federal 
        National Mortgage Association (Fannie Mae) and the Federal Home 
        Loan Mortgage Corporation (Freddie Mac) on unilateral reviews 
        of borrowers for loss mitigation in place of reviews of 
        applications initiated by borrowers, there is an increased need 
        for oversight to bring accountability to the loss mitigation 
        review process;
            (7) mortgage borrowers have also faced other wide-ranging 
        problems with their mortgage servicers, including errors that 
        have cost some borrowers money and have cost others their 
        homes;
            (8) such problems have included lapses in basic mortgage 
        servicing functions, such as inaccurate monthly statements, 
        improperly credited payments, improper escrow handling, ignored 
        customer complaints, and improper servicing transfers;
            (9) these failures in mortgage servicing are further 
        evidenced by enforcement actions initiated by the Consumer 
        Financial Protection Bureau against nine different bank and 
        non-bank mortgage servicers from 2013 through 2017 for 
        ``mismanaging the loss mitigation process'', ``mistreating 
        mortgage borrowers who were trying to save their homes from 
        foreclosure'', and ``failing borrowers at every stage of the 
        mortgage servicing process'';
            (10) although some Federal regulators, in particular the 
        Federal Housing Finance Agency and the Consumer Financial 
        Protection Bureau, have the authority to take enforcement and 
        supervisory action against mortgage servicers that harm 
        borrowers, Federal regulators should take additional action 
        that will protect homeowners from the types of abuses that have 
        led to stalled modifications, excess fees, and even 
        foreclosure; and
            (11) to ensure market confidence in the United States 
        housing system and improve accountability and transparency, 
        Federal regulators should be empowered to fully exercise all 
        statutorily mandated and implied powers to protect consumers 
        from harmful mortgage servicers.
    (b) Purpose.--It is the purpose of this Act to ensure that mortgage 
borrowers are protected from abusive servicing practices, to end 
engagement by mortgage servicers in illegal servicing practices, to 
keep more people in their homes whenever possible, to promote 
servicers' compliance with the loss mitigation guidelines of Fannie Mae 
and Freddie Mac, and to minimize losses to companies and taxpayers.

SEC. 3. REGULATION AND OVERSIGHT OF MORTGAGE SERVICERS.

    (a) In General.--Subpart A of part 2 of subtitle A of the Federal 
Housing Enterprises Financial Safety and Soundness Act of 1992 (12 
U.S.C. 4541 et seq.) is amended by adding at the end the following new 
section:

``SEC. 1327. PRUDENTIAL MANAGEMENT AND OPERATIONS STANDARDS FOR COVERED 
              SERVICERS.

    ``(a) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Director.--The term `Director' has the meaning given 
        such term in section 1303.
            ``(2) Covered servicer.--The term `covered servicer' means 
        a servicer, as such term is defined in section 6(i) of the Real 
        Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(i)), 
        that conducts mortgage servicing with respect to any single-
        family mortgage loans owned or guaranteed by any enterprise.
    ``(b) Standards.--The Director shall establish standards, by 
regulation, for covered servicers relating to each of the following:
            ``(1) Adequacy of internal controls and information 
        systems, taking into account the nature and scale of business 
        operations.
            ``(2) Independence and adequacy of internal audit systems.
            ``(3) Overall risk management processes, including adequacy 
        of oversight by senior management and policies to identify, 
        measure, monitor, and control material risks, including data 
        protection and reputational risks.
            ``(4) Compliance with the mortgage servicing requirements 
        under the Real Estate Settlement Procedures Act of 1974 (12 
        U.S.C. 2601 et seq.) and the regulations implementing such Act 
        (12 C.F.R. Part 1024; Regulation X), in consultation with the 
        Bureau of Consumer Financial Protection, including a system for 
        solicitation and review of borrower complaints involving 
        servicing of single-family housing mortgage loans owned or 
        guaranteed by an enterprise.
            ``(5) Documentation and retention of records related to 
        borrower interactions that enable the Director to evaluate the 
        quality of service given to borrowers, including borrower 
        contact, delinquency management practices, loan modifications 
        and foreclosure alternatives, and foreclosure timelines, which 
        shall provide that in each instance involving a default under a 
        loan, the covered servicer shall document and retain a detailed 
        description of the actions such servicer took to comply with 
        the enterprises' loss mitigation review requirements, including 
        efforts to establish borrower contact, solicit a loss 
        mitigation application, review the application under the 
        appropriate guidelines, and inform the borrower of the 
        servicer's decisions.
            ``(6) Such other operational and management standards as 
        the Director determines to be appropriate to carry out the 
        purposes of this Act.
    ``(c) Failure To Meet Standards.--
            ``(1) Plan requirement.--
                    ``(A) In general.--If the Director determines that 
                a covered servicer fails to meet any standard 
                established under subsection (b), the Director shall 
                require the covered servicer to submit an acceptable 
                plan, in writing, to the Director within the time 
                allowed under subparagraph (C).
                    ``(B) Contents.--Any plan required or authorized 
                under subparagraph (A) shall specify the actions that 
                the covered servicer will take to correct the 
                deficiency.
                    ``(C) Deadlines for submission and review.--The 
                Director shall by regulation establish deadlines that--
                            ``(i) require a covered servicer to submit 
                        a plan required under this subparagraph not 
                        later than 30 days after the Director 
                        determines that the covered servicer fails to 
                        meet any standard established under subsection 
                        (a); and
                            ``(ii) require the Director to approve, 
                        deny, or otherwise respond to the plan not 
                        later than 30 days after the plan is submitted.
            ``(2) Required order upon failure to submit or implement 
        plan.--If a covered servicer fails to submit an acceptable plan 
        within the time allowed under paragraph (1)(C), or fails in any 
        material respect to implement a plan accepted by the Director, 
        the following shall apply:
                    ``(A) Required correction of deficiency.--The 
                Director shall, by order, require the covered servicer 
                to correct the deficiency.
                    ``(B) Other authority.--The Director may, by order, 
                take one or more of the following actions until the 
                deficiency is corrected:
                            ``(i) Impose a civil monetary penalty upon 
                        the covered servicer in an amount not to exceed 
                        $10,000 for each day during which such 
                        deficiency continues.
                            ``(ii) Mandate the transfer of loan 
                        servicing rights without providing compensation 
                        to the covered servicer.
                            ``(iii) Limit or prohibit the covered 
                        servicer from conducting business with the 
                        enterprises.
                            ``(iv) Require the covered servicer to take 
                        any other action that the Director determines 
                        will better carry out the purposes of this 
                        section than any of the actions described in 
                        this subparagraph.
            ``(3) Mandatory restrictions.--In complying with paragraph 
        (2), the Director shall take one or more of the actions 
        described in clauses (i) through (iv) of paragraph (2)(B) if--
                    ``(A) the Director determines that the covered 
                servicer fails to meet any standard prescribed under 
                subsection (b); and
                    ``(B) the covered servicer has not corrected the 
                deficiency within a reasonable period or within a 
                period established by the Director.
    ``(d) Other Enforcement Authority Not Affected.--The authority of 
the Director under this section is in addition to any other authority 
of the Director and does not limit the additional or concurrent 
authority of the Bureau of Consumer Financial Protection as established 
in title X of the Dodd-Frank Wall Street Reform and Consumer Protection 
Act (12 U.S.C. 5481 et seq.).
    ``(e) Oversight.--The Director shall conduct oversight of covered 
servicers on a regular and ongoing basis and in a manner designed to 
ensure that such servicers comply with the requirements of this Act and 
the regulations established by the Director for servicing of such 
mortgages and to identify systemic problems and trends with such 
compliance.
    ``(f) Examinations.--
            ``(1) Authority.--The Director shall have power to make a 
        thorough examination of any covered servicer whenever the 
        Director determines an examination of any such servicer is 
        necessary to carry out the purposes of this section.
            ``(2) Manuals.--The Director may issue and revise 
        examination manuals as necessary to carry out paragraph (1).
    ``(g) Regulatory Fees.--
            ``(1) Authorization.--The Director may assess and collect 
        from covered servicers a reasonable fee, in an amount not 
        exceeding the amount sufficient to provide for reasonable costs 
        (including administrative costs) and expenses incurred by the 
        Director in connection with carrying out the responsibilities 
        of the Director under this section.
            ``(2) Establishment.--The Director shall establish the 
        amount of fees under this subsection for a fiscal year so as to 
        generate a total revenue amount not exceeding the Director's 
        estimate of 100 percent of the costs of the Agency in carrying 
        out the responsibilities under this section during such year.
            ``(3) Availability.--Fees authorized under paragraph (1) 
        for a fiscal year shall be available for obligation only--
                    ``(A) to the extent and in the amount provided in 
                advance in appropriations Acts; and
                    ``(B) to pay the costs of the Agency in carrying 
                out the responsibilities under this section during such 
                fiscal year.
    ``(h) Issuance of Regulations.--The Director shall issue such 
regulations as may be necessary to enable the Director to administer or 
to carry out the purposes of this section and to prevent evasions 
thereof.''.
    (b) Timing.--The Director of the Federal Housing Finance Agency 
shall issue final regulations, as required by section 1327 of the 
Federal Housing Enterprises Financial Safety and Soundness Act of 1992 
(as added by subsection (a) of this section), not later than the 
expiration of the 12-month period beginning on the date of the 
enactment of this Act.
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