Title: A bill to provide borrowers the right to request forbearance on mortgage loan payments due to a declared disaster, and for other purposes.
Policy area: Housing and Community Development

Summary:
This bill suspends foreclosures and establishes a forbearance program for certain federally backed mortgages during the coronavirus (i.e., the virus that causes COVID-19) outbreak and other disasters.
Specifically, during the coronavirus outbreak or in an area where another disaster has been declared, a federally backed mortgage servicer is (1) prohibited from initiating a foreclosure, and (2) must suspend any foreclosure procedures. These requirements are lifted 180 days after such a declaration.
Borrowers experiencing financial hardships due to the coronavirus outbreak or other disaster may request a forbearance on their federally backed mortgage payment for 180 days, which may be extended for an additional 180 days at the borrower's request. A servicer may not charge fees, interest, or other penalties in connection with the forbearance. Before the end of the forbearance period, a servicer must evaluate a borrower's ability to make regular mortgage payments. If the borrower is unable to return to making regular payments, the servicer must evaluate the borrower for certain loan modification options.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 3509 Introduced in Senate (IS)]

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116th CONGRESS
  2d Session
                                S. 3509

To provide borrowers the right to request forbearance on mortgage loan 
      payments due to a declared disaster, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 17, 2020

   Mr. Brown introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
To provide borrowers the right to request forbearance on mortgage loan 
      payments due to a declared disaster, 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. CONSUMER RIGHT TO REQUEST FORBEARANCE.

    The Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 
et seq.) is amended--
            (1) in section 3 (12 U.S.C. 2602)--
                    (A) in paragraph (8), by striking ``and'' at the 
                end;
                    (B) in paragraph (9), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(10) the term `declared disaster' means--
                    ``(A) the coronavirus disease (COVID-19) pandemic; 
                and
                    ``(B) a major disaster or emergency declared by the 
                President under section 401 or 501, respectively, of 
                the Robert T. Stafford Disaster Relief and Emergency 
                Assistance Act (42 U.S.C. 5170, 5191).''; and
            (2) in section 6 (12 U.S.C. 2605)--
                    (A) in subsection (k)(1)--
                            (i) in subparagraph (D), by striking ``or'' 
                        at the end;
                            (ii) by redesignating subparagraph (E) as 
                        subparagraph (G); and
                            (iii) by inserting after subparagraph (D) 
                        the following:
                    ``(E) initiate any judicial or non-judicial 
                foreclosure process, move for a foreclosure judgment or 
                order of sale, or execute a foreclosure-related 
                eviction or foreclosure sale during the 180-day period 
                following a declared disaster in the area in which the 
                property is located;
                    ``(F) fail to toll the time in a foreclosure 
                process on a property for not less than 180 days 
                following a declared disaster in the area in which the 
                property is located; or''; and
                    (B) by adding at the end the following:
    ``(n) Consumer Right To Request Forbearance.--
            ``(1) In general.--A borrower experiencing a financial 
        hardship due, directly or indirectly, to a declared disaster 
        may request forbearance from any mortgage payment for not less 
        than 180 days, which may be extended for an additional 180 days 
        at the request of the borrower, provided that, at the 
        borrower's request, either the initial or extended period of 
        forbearance may be shortened.
            ``(2) Accrual of interest or fees.--During a period of 
        forbearance described in paragraph (1), no interest or other 
        fees shall accrue on the borrower's account.
            ``(3) Request for relief.--A borrower may submit a request 
        for forbearance under paragraph (1) to their servicer, either 
        orally or in writing, affirming that the borrower is 
        experiencing hardship due, directly or indirectly, to a 
        declared disaster.
            ``(4) Requirements for servicers.--
                    ``(A) Notification.--
                            ``(i) In general.--Each servicer of a 
                        federally related mortgage loan shall notify 
                        the borrower of their right to request 
                        forbearance under paragraph (3)--
                                    ``(I) not later than 14 days after 
                                the date of a declared disaster or, in 
                                the case of the coronavirus disease 
                                (COVID-19) pandemic, not later than 14 
                                days after the date of enactment of 
                                this Act; and
                                    ``(II) during the incident period 
                                for a declared disaster and during not 
                                less than the 180-day period following 
                                that incident period--
                                            ``(aa) on each periodic 
                                        statement provided to the 
                                        borrower; and
                                            ``(bb) in any oral or 
                                        written communication by the 
                                        servicer with or to the 
                                        borrower.
                            ``(ii) Manner of notification.--
                                    ``(I) Written notification.--Any 
                                written notification required under 
                                clause (i)--
                                            ``(aa) shall be provided--

                                                    ``(AA) in English 
                                                and Spanish and in any 
                                                additional languages in 
                                                which the servicer 
                                                communicates, including 
                                                the language in which 
                                                the loan was 
                                                negotiated, to the 
                                                extent known by the 
                                                servicer; and

                                                    ``(BB) at least as 
                                                clearly and 
                                                conspicuously as the 
                                                most clear and 
                                                conspicuous disclosure 
                                                on the document; and

                                            ``(bb) may be provided by 
                                        first-class mail or 
                                        electronically, if the borrower 
                                        has otherwise consented to 
                                        electronic communication with 
                                        the servicer and has not 
                                        revoked such consent.
                                    ``(II) Oral notification.--Any oral 
                                notification required under clause (i) 
                                shall be provided in the language the 
                                servicer otherwise uses to communicate 
                                with the borrower.
                                    ``(III) Written translations.--In 
                                providing written notifications in 
                                languages other than English under 
                                subclause (I), a servicer may rely on 
                                written translations developed by the 
                                Federal Housing Finance Agency or the 
                                Bureau.
                    ``(B) Other requirements.--Upon receiving a request 
                for forbearance from a consumer under paragraph (3), a 
                servicer shall--
                            ``(i) with no additional documentation 
                        required other than the borrower's attestation 
                        to a hardship caused by the declared disaster 
                        and with no fees, interest, or other penalties 
                        charged to the borrower in connection with the 
                        forbearance, provide the forbearance for not 
                        less than 180 days, which may be extended for 
                        an additional 180 days at the request of the 
                        borrower, provided that, at the borrower's 
                        request, either the initial or extended period 
                        of forbearance may be shortened;
                            ``(ii) while such forbearance is in effect, 
                        pay or advance funds to make disbursements in a 
                        timely manner from any escrow account 
                        established on the mortgage loan, and maintain 
                        regular communication with such borrower; and
                            ``(iii)(I) before the end of such 
                        forbearance, evaluate the borrower's ability to 
                        return to making regular mortgage payments;
                            ``(II) if the borrower is able to return to 
                        making regular mortgage payments at the end of 
                        the forbearance period--
                                    ``(aa) modify the borrower's loan 
                                to extend the term for the same period 
                                as the length of the forbearance, with 
                                all payments that were not made during 
                                the forbearance distributed at the same 
                                intervals as the borrower's existing 
                                payment schedule and evenly distributed 
                                across those intervals, with no 
                                penalties or additional interest 
                                accrued or modification fee charged to 
                                the borrower; and
                                    ``(bb) notify the borrower in 
                                writing of the extension, including 
                                provision of a new payment schedule and 
                                date of maturity, and that the borrower 
                                shall have the election of prepaying 
                                the forborne payments at any time, in a 
                                lump sum or otherwise;
                            ``(III) if the borrower is financially 
                        unable to return to making regular mortgage 
                        payments at the end of the forbearance period--
                                    ``(aa) evaluate the borrower for 
                                all loan modification options, 
                                including--
                                            ``(AA) further extending 
                                        the borrower's repayment 
                                        period;
                                            ``(BB) reducing the 
                                        principal balance of the loan; 
                                        or
                                            ``(CC) other modification 
                                        options available to the 
                                        servicer under the terms of 
                                        their loan and existing laws 
                                        and policies; and
                                    ``(bb) if the borrower qualifies 
                                for such a modification, modify the 
                                borrower's loan to provide a loan with 
                                such terms as to provide an affordable 
                                payment, with no penalties, additional 
                                interest, or modification fees charged 
                                to the borrower; and
                            ``(IV) if a borrower is granted a 
                        forbearance on payments that would be owed 
                        pursuant to a trial loan modification plan--
                                    ``(aa) any forbearance of payments 
                                shall not be treated as missed or 
                                delinquent payments or otherwise 
                                negatively affect the borrower's 
                                ability to complete their trial plan; 
                                and
                                    ``(bb) any past due amounts as of 
                                the end of the trial period, including 
                                unpaid interest, real estate taxes, 
                                insurance premiums, and assessments 
                                paid on the borrower's behalf, will be 
                                added to the mortgage loan balance, but 
                                only to the extent that such charges 
                                are not fees associated with the 
                                granting of the forbearance, such as 
                                late fees, modification fees, or unpaid 
                                interest from the period of the 
                                forbearance.''.
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