Title: National Homeowners Bill of Rights Act of 2017
Policy area: Housing and Community Development

Summary:
National Homeowners Bill of Rights Act of 2017
This bill requires servicers of federally related mortgage loans to (1) establish for each borrower's account a single electronic record accessible throughout the servicer and available to all relevant staff; (2) maintain a website where borrowers may check their estimated net present value; and (3) provide free interpretation services to borrowers.
The bill also (1) establishes a loan-modification process to reduce the payments of eligible borrowers, (2) directs the Consumer Financial Protection Bureau to appoint a Mortgage Servicer Ombudsman, and (3) establishes certain limits on foreclosure sales.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3015 Introduced in House (IH)]

<DOC>






115th CONGRESS
  1st Session
                                H. R. 3015

 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 22, 2017

Ms. Michelle Lujan Grisham of New Mexico introduced the following bill; 
       which was referred to the Committee on Financial 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 Representatives 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 2017''.

SEC. 2. SERVICER TREATMENT OF BORROWERS.

    (a) In General.--Section 6 of the Real Estate Settlement Procedures 
Act of 1974 (12 U.S.C. 2605) is amended by adding at the end the 
following:
    ``(n) Servicer Treatment of Borrowers.--
            ``(1) Servicer requirements.--
                    ``(A) 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.
                    ``(B) Availability of net present value 
                information.--Servicers shall maintain a free and 
                publicly accessible website where borrowers may check 
                their estimated net present value.
            ``(2) Protections for homeowners with limited english 
        proficiency.--
                    ``(A) Free oral interpretation.--Servicers shall 
                provide free oral interpretation services for borrowers 
                whose files include a notation of a preferred language 
                other than English or who request such services and 
                such services may be provided by contracting with 
                housing counseling agencies that are approved by the 
                Department of Housing and Urban Development and that 
                have appropriate language capacity. The servicer shall 
                ensure that the person providing the oral 
                interpretation services has specific knowledge of loss 
                mitigation and mortgage terms.
                    ``(B) Notification of available assistance.--
                            ``(i) In general.--Servicers shall provide 
                        each borrower with a notice--
                                    ``(I) stating that the borrower may 
                                receive assistance in a language other 
                                than English; and
                                    ``(II) containing information on 
                                how to request such assistance.
                            ``(ii) Form of notice.--The Bureau may 
                        issue regulations to provide for the form, 
                        content, and manner of service of the notice 
                        described under clause (i).
                            ``(iii) Notice on transfer.--Each 
                        transferee servicer to whom the servicing of 
                        any federally related mortgage loan is 
                        assigned, sold, or transferred shall include 
                        the notice required under this paragraph in the 
                        notice required under subsection (c).
                    ``(C) Notation in file.--Servicers shall--
                            ``(i) note a request for translation 
                        services in the borrower's file and make such 
                        note available to all relevant servicer 
                        personnel; and
                            ``(ii) 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.
                    ``(D) Translated documents.--
                            ``(i) Providing documents.--
                                    ``(I) In general.--Servicers shall, 
                                if a borrower asks for translated 
                                documents or if the borrower's file 
                                contains a notation that the borrower 
                                has a language preference other than 
                                English or if the borrower has already 
                                requested oral interpretation services, 
                                provide key documents to the borrower 
                                translated into the language of the 
                                borrower, including--
                                            ``(aa) periodic statements;
                                            ``(bb) affordable loan 
                                        modification applications, 
                                        including hardship affidavits;
                                            ``(cc) denial notices;
                                            ``(dd) loan modification 
                                        offers, including any trial 
                                        period plan; and
                                            ``(ee) such other documents 
                                        as the Bureau may determine 
                                        appropriate.
                                    ``(II) Exception.--Subclause (I) 
                                shall only require providing documents 
                                in--
                                            ``(aa) commonly spoken 
                                        languages in the United States, 
                                        as determined by the Bureau; 
                                        and
                                            ``(bb) with respect to a 
                                        particular servicer, languages 
                                        spoken by a significant number 
                                        of individuals living in any 
                                        markets in which the servicer 
                                        does business, as determined by 
                                        the Bureau.
                                    ``(III) Bureau consideration of 
                                census data.--In making determinations 
                                under this clause, the Bureau shall 
                                take into consideration data from the 
                                Bureau of the Census on percentages of 
                                individuals who reported they speak 
                                English less than `very well'.
                            ``(ii) 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 Government.
                            ``(iii) Exception.--Clause (i) shall not 
                        apply to small servicers, as defined under 
                        section 1026.41(e)(4)(ii) of title 12, Code of 
                        Federal Regulations.
                            ``(iv) Development of glossary of terms.--
                        The Bureau shall develop a glossary of mortgage 
                        loan and loss mitigation terms in each commonly 
                        spoken language in the United States, and make 
                        such glossary available to servicers and the 
                        public.
                    ``(E) Continuing requirement.--Once a servicer has 
                begun to communicate with a borrower in a particular 
                language, the servicer shall continue to communicate 
                with the borrower in that language unless otherwise 
                requested by the borrower.
            ``(3) Requirements during affordable loan modification 
        process.--
                    ``(A) Borrowers facing imminent default.--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 subsection.
                    ``(B) Assistance to borrowers.--
                            ``(i) Assistance in applying for affordable 
                        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 
                                nonprofit legal services organizations 
                                and housing agencies approved by the 
                                Department of Housing and Urban 
                                Development, that can assist the 
                                borrowers with documents.
                            ``(ii) Treatment of successors in 
                        interest.--Servicers shall--
                                    ``(I) provide full information and 
                                complete loss mitigation options to 
                                successor homeowners protected from an 
                                acceleration of a mortgage loan under 
                                the Garn-St Germain Depository 
                                Institutions Act of 1982, if requested 
                                by the successor homeowner; and
                                    ``(II) review a mortgage loan for 
                                loss mitigation, as though the 
                                successor homeowner was the borrower, 
                                and provide a decision on available 
                                loss mitigation prior to an assumption 
                                of the mortgage loan, if requested by 
                                the succeeding homeowner.
                    ``(C) Simultaneous review for all loss mitigation 
                options.--A servicer shall simultaneously evaluate a 
                borrower for all available loss mitigation options, 
                including an affordable loan modification.
                    ``(D) Rule of construction.--Nothing in this 
                subsection 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.
                    ``(E) Requirements related to transfer of loans.--
                            ``(i) In general.--For any transfer of 
                        servicing to a successor servicer of a 
                        federally related mortgage loan or subservicer, 
                        the transferring servicer shall--
                                    ``(I) inform the successor servicer 
                                (including a subservicer) whether a 
                                loan modification request is pending;
                                    ``(II) provide the successor 
                                servicer with all documentation related 
                                to the mortgage loan, including any 
                                documentation relating to a loan 
                                modification or loss mitigation 
                                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 
                                processing prior loan modification 
                                requests, by including such requirement 
                                in the agreement made between the 
                                servicers when transferring the loan;
                                    ``(V) ensure that successor 
                                servicer shall honor trial and 
                                permanent loan modification agreements 
                                entered into by the transferring 
                                servicer by including such requirement 
                                in the agreement made between the 
                                servicers when transferring the loan; 
                                and
                                    ``(VI) notify the borrower of the 
                                transferred loan that the new servicer 
                                is required to accept and continue 
                                processing prior loan modification 
                                requests, if any, and is required to 
                                honor trial and permanent loan 
                                modification agreements entered into by 
                                the transferring servicer, if any.
                            ``(ii) Honoring of existing loan 
                        modifications and applications in process.--The 
                        successor servicer shall agree to honor and 
                        accept any existing loan modification and 
                        continue any loan modification applications.
                            ``(iii) Prohibition on foreclosure.--During 
                        the 60-day period beginning on the effective 
                        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 
                        nonjudicial foreclosure or be subject to a 
                        foreclosure sale.
            ``(4) 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 modification application if 
        the borrower experiences a material change in circumstances, as 
        defined by the Bureau.
            ``(5) Limitation on foreclosure proceedings.--
                    ``(A) Halt to foreclosure and cancellation of 
                scheduled sale pending application.--
                            ``(i) In general.--If a borrower submits an 
                        initial application for affordable loan 
                        modification assistance more than 7 business 
                        days before a scheduled foreclosure sale, the 
                        servicer must stop and cancel the foreclosure 
                        sale and may not continue a nonjudicial 
                        foreclosure or a judicial foreclosure against 
                        the mortgagor.
                            ``(ii) Treatment if no foreclosure has been 
                        initiated.--For purposes of clause (i), if no 
                        foreclosure has been initiated at the time of a 
                        mortgagor's initial application for affordable 
                        loan modification assistance, then an initial 
                        application is deemed to have been submitted 
                        more than 7 business days before a scheduled 
                        foreclosure sale.
                            ``(iii) Treatment if a foreclosure has been 
                        initiated but no sale scheduled.--For purposes 
                        of clause (i), if a foreclosure has been 
                        initiated at the time of the mortgagor's 
                        initial application for affordable loan 
                        modification assistance, but a foreclosure sale 
                        has not been scheduled, then an initial 
                        application is deemed to have been submitted 
                        more than 7 business days before a scheduled 
                        foreclosure sale.
                    ``(B) Foreclosure proceedings permitted.--
                Notwithstanding subparagraph (A), a servicer may 
                initiate or continue a judicial or nonjudicial 
                foreclosure under State law against a borrower, if--
                            ``(i) the servicer--
                                    ``(I) determines that the borrower 
                                is not eligible for a modification;
                                    ``(II) notifies the borrower of the 
                                determination under subclause (I); and
                                    ``(III) provides the borrower--
                                            ``(aa) a copy of any net 
                                        present value calculation made 
                                        by the servicer in relation to 
                                        an affordable loan 
                                        modification, including any 
                                        information providing a basis 
                                        for such net present value 
                                        calculation;
                                            ``(bb) 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 mortgage is 
                                        located;
                                            ``(cc) 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;
                                            ``(dd) a copy of all 
                                        correspondence between the 
                                        servicer and the borrowers and 
                                        investors in which the servicer 
                                        attempts to obtain permission 
                                        to make a modification; and
                                            ``(ee) the alternatives to 
                                        foreclosure available to the 
                                        borrower, including deed in 
                                        lieu of foreclosures and short 
                                        sales; or
                            ``(ii) 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 Bureau) to obtain 
                                underlying information to complete an 
                                application or fails to make a trial or 
                                permanent loan modification payment.
                For purposes of clause (i), a `pooling and servicing 
                agreement' is any contract establishing the transaction 
                rights and duties of the parties to any mortgage-backed 
                securitization transaction.
                    ``(C) Bar to foreclosure.--Failure to comply with 
                the requirements of this paragraph shall be a bar to 
                the foreclosure of a mortgage, deed of trust, or 
                substantially similar instrument.
                    ``(D) Fees.--
                            ``(i) Waiver of late fees.--If a borrower's 
                        application for affordable loan modification 
                        assistance is accepted, the servicer shall 
                        waive any foreclosure fees and any late fees 
                        related to the delinquency in payment.
                            ``(ii) No fee accrual while application is 
                        pending.--A borrower shall not accrue 
                        additional late or foreclosure fees during the 
                        period beginning on the date that the borrower 
                        submits an affordable loan modification 
                        application and the date on which the servicer 
                        makes a determination on such application.
                    ``(E) Notification.--With respect to a foreclosure 
                sale that is postponed by reason of this subsection, 
                the servicer shall notify the borrower in writing of 
                such postponement and, if a date for such foreclosure 
                sale is rescheduled, shall notify the borrower in 
                writing of the new foreclosure sale date.
                    ``(F) Certification of determination of eligibility 
                required for sale.--
                            ``(i) Sale of property prohibited.--If the 
                        servicer of a mortgage does not file a 
                        certification with the appropriate land records 
                        office in the jurisdiction where the property 
                        securing the mortgage is located, stating that 
                        the servicer has determined the eligibility of 
                        the mortgagor for an affordable loan 
                        modification in compliance with this 
                        subsection--
                                    ``(I) the mortgagee may not sell 
                                the property securing the mortgage; and
                                    ``(II) no person that purchases the 
                                property securing the mortgage may 
                                initiate an action to recover 
                                possession of the property.
                            ``(ii) Violations.--A sale of property in 
                        violation of this subparagraph shall be void.
                    ``(G) Initial application defined.--For purposes of 
                this paragraph, the term `initial application' means a 
                completed Uniform Borrower Assistance Form 710 of the 
                Federal National Mortgage Association or the Federal 
                Home Loan Mortgage Corporation, a Request for 
                Modification and Affidavit of the Making Home 
                Affordable Program, or other equivalent form that sets 
                forth the borrower's financial, income, and hardship 
                information and Form 4506-T of the Internal Revenue 
                Service.
            ``(6) Affordable loan modifications.--
                    ``(A) Affordable loan modification defined.--For 
                purposes of this subsection, the term `affordable 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 conditions 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.
                    ``(B) Calculation of target affordable regular 
                mortgage payment.--For purposes of this paragraph, the 
                target affordable regular mortgage 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 conditions 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 mortgage, as modified by any reduction in 
                principal.
                    ``(C) Eligibility.--A mortgagor shall be eligible 
                to participate in an affordable loan modification if--
                            ``(i) such person is a borrower under a 
                        federally related loan secured by the principal 
                        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 
                        Institutions Act of 1982, who is unable to make 
                        payments on a federally related mortgage loan 
                        under such criteria as the Director of the 
                        Bureau shall define, in consultation with the 
                        Secretary of Housing and Urban Development and 
                        the Secretary of the Treasury;
                            ``(ii) such residence is occupied by the 
                        mortgagor; and
                            ``(iii) the loan modification has a 
                        positive net present value (as defined under 
                        subparagraph (D)(ii)(IV)(bb)).
                    ``(D) Earned principal forgiveness.--
                            ``(i) In general.--If, after reducing 
                        mortgage note principal under earned principal 
                        forgiveness provided in clause (ii), a target 
                        affordable regular mortgage payment has not 
                        been achieved, the servicer of the mortgage 
                        shall comply with the affordable loan 
                        modification plan waterfall steps as set out by 
                        the Bureau of interest rate reduction, term 
                        extension, and principal forbearance, as 
                        necessary to achieve a target affordable 
                        regular mortgage payment.
                            ``(ii) Earned principal forgiveness.--
                                    ``(I) Principal reduction.--The 
                                Bureau 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 paragraph.
                                    ``(II) Principal reduction 
                                required.--Except as provided under 
                                subclause (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 determined by 
                                the Bureau.
                                    ``(III) Exceptions.--
                                            ``(aa) Greater principal 
                                        reduction.--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.
                                            ``(bb) 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.--
                                            ``(aa) 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.
                                            ``(bb) Positive net present 
                                        value calculation.--A net 
                                        present value calculation shall 
                                        be deemed to be `positive' for 
                                        the mortgage investors if the 
                                        net present value result for an 
                                        affordable loan modification 
                                        scenario is greater than the 
                                        net present value result if no 
                                        affordable 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.
                                    ``(V) Principal forgiveness.--
                                            ``(aa) Treatment of 
                                        principal reduction amount.--
                                        Any amount of principal 
                                        reduction under subclause (II) 
                                        shall be treated as 
                                        noninterest-bearing principal 
                                        forbearance until the dates 
                                        described under item (bb). The 
                                        principal reduction described 
                                        in this clause shall be deemed 
                                        to be separate from and 
                                        exclusive of any other 
                                        forbearance that may be offered 
                                        in conjunction with a 
                                        modification under an 
                                        affordable loan modification 
                                        program.
                                            ``(bb) Reduction of 
                                        principal.--The servicer of a 
                                        mortgage modified under an 
                                        affordable loan modification 
                                        plan shall reduce 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 
                                        subclause (II) on each of the 
                                        following dates:

                                                    ``(AA) The date 
                                                that is 1 year after 
                                                the date on which the 
                                                affordable loan 
                                                modification begins.

                                                    ``(BB) The date 
                                                that is 2 years after 
                                                the date on which the 
                                                affordable loan 
                                                medication begins.

                                                    ``(CC) The date 
                                                that is 3 years after 
                                                the date on which the 
                                                affordable loan 
                                                modification begins.

                                    ``(VI) Certain modifications.--With 
                                respect to a borrower that is not 
                                underwater and does not qualify for 
                                principle reduction, the servicer shall 
                                offer such borrower an affordable loan 
                                modification to reach the target 
                                affordable regular mortgage payment 
                                amount, if the borrower qualifies.
                    ``(E) Treatment of junior liens.--With respect to a 
                borrower, if a primary mortgage loan is modified 
                pursuant to this paragraph, the servicer of any junior 
                mortgage loan shall offer to modify or extinguish the 
                second lien according to requirements established by 
                the Bureau.
                    ``(F) Rule of construction.--Nothing in this 
                subsection shall be construed as prohibiting a servicer 
                from providing a loan modification that does not 
                produce a positive net present value (as defined under 
                subparagraph (D)(ii)(IV)(bb)).
            ``(7) Bar to foreclosure.--In any judicial or nonjudicial 
        foreclosure proceeding, it shall be a bar to foreclosure that 
        the servicer of the federally related mortgage loan on the 
        property to be foreclosed violated any provision of this 
        subsection.
    ``(o) Mortgage Servicer Ombudsman.--
            ``(1) In general.--The Director of the Bureau shall appoint 
        a Mortgage Servicer Ombudsman (the `Ombudsman') within the 
        Bureau.
            ``(2) Duties.--The Ombudsman shall provide assistance 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 noncompliance.
            ``(3) Focus on low-income borrowers.--In carrying out this 
        subsection, the Ombudsman shall focus on providing assistance 
        to low-income borrowers.
            ``(4) Consultation.--The Ombudsman shall consult with--
                    ``(A) attorneys general of States in carrying out 
                this section; and
                    ``(B) other offices of the Bureau that engage in 
                dispute resolution.
            ``(5) Nonduplication.--The Ombudsman may not carry out any 
        activities that would be duplicative with activities of other 
        Bureau offices.
    ``(p) 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 subject 
to a fine of not more than $7,500 for each such loan.''.
    (b) Damages and Costs.--Section 6(f) of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2605(f)) is amended by striking ``a 
pattern or practice of'' each place such term appears.

SEC. 3. PREFERRED LANGUAGE OF CONSUMER.

    Section 129B of the Truth in Lending Act (15 U.S.C. 1639b) is 
amended by adding at the end the following:
    ``(g) Preferred Language of Consumer.--
            ``(1) Application question.--In any application used by a 
        mortgage originator for a residential mortgage loan, the 
        originator shall ask the consumer to state the consumer's 
        preferred language.
            ``(2) Letters of explanation for origination.--A mortgage 
        originator for a residential mortgage loan shall--
                    ``(A) accept letters of explanation for origination 
                in the consumer's preferred language; and
                    ``(B) include any such letters in the consumer's 
                file.
            ``(3) Sharing of information.--Any time a mortgage 
        originator assigns a residential mortgage loan or contracts 
        with a servicer with respect to a residential mortgage loan, 
        the originator shall inform the assignee or servicer of the 
        consumer's preferred language reported under paragraph (1) and 
        provide the assignee or servicer with any letters of 
        explanation for origination described under paragraph (2).''.

SEC. 4. PROTECTING TENANTS AT FORECLOSURE.

    (a) Effect of Foreclosure on Preexisting Tenancy.--
            (1) In general.--In the case of any foreclosure on a 
        federally-related mortgage loan or on any dwelling or 
        residential real property after the date of enactment of this 
        section, any immediate successor in interest in such property 
        pursuant to the foreclosure shall assume such interest subject 
        to--
                    (A) the provision, by such successor in interest of 
                a notice to vacate to any bona fide tenant at least 90 
                days before the effective date of such notice; and
                    (B) the rights of any bona fide tenant, as of the 
                date of such notice of foreclosure--
                            (i) under any bona fide lease entered into 
                        before the notice of foreclosure to occupy the 
                        premises until the end of the remaining term of 
                        the lease, except that a successor in interest 
                        may terminate a lease effective on the date of 
                        sale of the unit to a purchaser who will occupy 
                        the unit as a primary residence, subject to the 
                        receipt by the tenant of the 90-day notice 
                        under subparagraph (A); or
                            (ii) without a lease or with a lease 
                        terminable at will under State law, subject to 
                        the receipt by the tenant of the 90-day notice 
                        under subparagraph (A), except that nothing 
                        under this subsection shall affect the 
                        requirements for termination of any Federal- or 
                        State-subsidized tenancy or of any State or 
                        local law that provides longer time periods or 
                        other additional protections for tenants.
            (2) Bona fide lease or tenancy.--For purposes of this 
        subsection, a lease or tenancy shall be considered bona fide 
        only if--
                    (A) the mortgagor or the child, spouse, or parent 
                of the mortgagor under the contract is not the tenant;
                    (B) the lease or tenancy was the result of an arms-
                length transaction; and
                    (C) the lease or tenancy requires the receipt of 
                rent that is not substantially less than fair market 
                rent for the property or the unit's rent is reduced or 
                subsidized due to a Federal, State, or local subsidy.
            (3) Definition.--For purposes of this subsection, the term 
        ``federally-related mortgage loan'' has the same meaning as in 
        section 3 of the Real Estate Settlement Procedures Act of 1974 
        (12 U.S.C. 2602).
    (b) Effect of Foreclosure on Section 8 Tenancies.--Section 8(o)(7) 
of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)(7)) is 
amended--
            (1) by inserting before the semicolon in subparagraph (C) 
        the following: ``and in the case of an owner who is an 
        immediate successor in interest pursuant to foreclosure during 
        the term of the lease vacating the property prior to sale shall 
        not constitute other good cause, except that the owner may 
        terminate the tenancy effective on the date of transfer of the 
        unit to the owner if the owner--
                            ``(i) will occupy the unit as a primary 
                        residence; and
                            ``(ii) has provided the tenant a notice to 
                        vacate at least 90 days before the effective 
                        date of such notice.''; and
            (2) by inserting at the end of subparagraph (F) the 
        following: ``In the case of any foreclosure on any federally-
        related mortgage loan (as that term is defined in section 3 of 
        the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 
        2602)) or on any residential real property in which a recipient 
        of assistance under this subsection resides, the immediate 
        successor in interest in such property pursuant to the 
        foreclosure shall assume such interest subject to the lease 
        between the prior owner and the tenant and to the housing 
        assistance payments contract between the prior owner and the 
        public housing agency for the occupied unit, except that this 
        provision and the provisions related to foreclosure in 
        subparagraph (C) shall not shall not affect any State or local 
        law that provides longer time periods or other additional 
        protections for tenants.''.
    (c) Rulemaking.--The Secretary of Housing and Urban Development 
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 
section and the amendments made by this section, and the Secretary 
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.

SEC. 5. 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 protections for consumers.

SEC. 6. RULEMAKING.

    Except with respect to section 4, 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.
                                 <all>