Q: In this task, you are given text for US Congressional and California state bills, your task is to generate a summary for this bill.
SECTION 1. SHORT TITLE.

This Act may be cited as the ''Mortgage Enhancement and
Modification Act of 2008''.

SEC. 2. SAFE HARBOR FOR QUALIFIED LOAN MODIFICATIONS OR WORKOUT PLANS
FOR CERTAIN RESIDENTIAL MORTGAGE LOANS.

(a) Standard for Loan Modifications or Workout Plans.--Absent
specific contractual provisions to the contrary--
(1) the duty to maximize or not negatively affect, the
recovery of total proceeds from pooled residential mortgage
loans is owed by a servicer of such pooled loans to the
securitization vehicle for the benefit of all investors and
holders of beneficial interests in the pooled loans, in the
aggregate, and not to any individual party or group of parties;
(2) a servicer of pooled residential mortgage loans shall
be deemed to be acting on behalf of the securitization vehicle
in the best interest of all investors and holders of beneficial
interests in the pooled loans, in the aggregate if--
(A) for a loan that is in payment default under the
loan agreement or for which payment default is imminent
or reasonably foreseeable, the loan servicer makes
reasonable and documented efforts, which shall be made
available to the investors and holders of beneficial
interests in the pooled loans upon request, to
implement a modification or workout plan; or
(B) the efforts under subparagraph (A) are
unsuccessful or such plan would be infeasible, engages
in other loss mitigation, including accepting a short
payment or partial discharge of principal, or agreeing
to a short sale of the property, to the extent that the
servicer reasonably believes the modification or
workout plan or other mitigation actions will maximize
the net present value to be realized on the loans over
that which would be realized through foreclosure under
the present terms of the contract; and
(3) a servicer shall be deemed to be acting on behalf of
the securitization vehicle in the best interest of all
investors and holders of beneficial interests in the pooled
loans, in the aggregate, if the servicer makes efforts--
(A) to proactively contact borrowers that are
reasonably considered to be approaching a calendar date
in which a predetermined or contractually established
rate of interest on the principal of the loan shall--
(i) increase or fluctuate in accordance
with a designated market indicator or
indicators; or
(ii) increase or fluctuate within a
predetermined range; and
(B) to determine--
(i) the ability of the borrower to make
payments following a reset of interest rates
using common and appropriate metric standards
such as debt to income ratios;
(ii) whether the borrower is in danger of
default or disclosure; and
(iii) whether a loan modification or other
mitigation effort is appropriate.
(b) Safe Harbor.--Absent specific contractual provisions to the
contrary, a servicer of a residential mortgage loan that acts in a
manner consistent with the provisions set forth in subsection (a),
shall not be liable for entering into a qualified loan modification, or
other loss mitigation effort described in subsection (a) to--
(1) any person, based on that person's ownership of a
residential mortgage loan or any interest in a pool of
residential mortgage loans or in securities that distribute
payments out of the principal, interest, and other payments in
loans on the pool;
(2) any person who is obligated to make payments determined
in reference to any loan or any interest referred to in
paragraph (1);
(3) any person that insures any loan or any interest
referred to in paragraph (1) under any law or regulation of the
United States or any law or regulation of any State or
political subdivision of any State; or
(4) any other person or institution that may have a
financial or commercial relationship and association with the
persons associated in paragraphs (1) through (3).
(c) Rule of Construction.--No provision of this section shall be
construed as limiting the ability of a servicer to enter into loan
modifications or workout plans other than qualified loan modification
or workout plans.
(d) Definitions.--As used in this section, the following
definitions shall apply:
(1) Qualified loan modification or workout plan.--The term
''qualified loan modification or workout plan'' means a
modification or plan that--
(A) is scheduled to remain in place until the
borrower sells or refinances the property, or for at
least 5 years from the date of adoption of the plan,
whichever is sooner;
(B) does not provide for a repayment schedule that
results in negative amortization at any time;
(C) does not require the borrower to pay additional
points and fees;
(D) materially improves the ability of the borrower
to--
(i) prevent foreclosure; and
(ii) resume a reasonable repayment schedule
based on, but not limited to, debt to income
ratio; and
(E) would reasonably reduce the likelihood of
default of foreclosure during the life of the
modification or plan;
(F) may waive any prepayment penalties that
reasonably inhibited a loan holder from fulfilling his
ability to pay down the principal or maintain regular
payments as defined by the terms of the loan; and
(G) includes full and accurate disclosure to the
borrower of the terms of the modification or workout
plan, provided that such disclosures are executed in
easy to understand terms that demonstrate how the
borrower will benefit from the new terms in such
modification or workout plan as compared with the terms
and conditions of the previous loan of the borrower.
(2) Residential mortgage loan.--The term ''residential
mortgage loan'' means a loan that is secured by a lien on an
owner-occupied residential dwelling.
(3) Securitization vehicle.--The term ''securitization
vehicle'' means a trust, corporation, partnership, limited
liability entity, special purpose entity, or other structure
that--
(A) is the issuer, or is created by the issuer, of
mortgage pass-through certificates, participation
certificates, mortgage-backed securities, or other
similar securities backed by a pool of assets that
includes residential mortgage loans; and
(B) holds such loans.
(e) Limitations on Safe Harbor.--Except for the provisions of
section 2 that limit liability for efforts to pursue qualified loan
modifications or workout plans, the provisions of this section shall
not be construed to affect or limit any other liability, duty, or other
fiduciary obligation of the servicer to the investors and holders of
beneficial interests in the pooled loans to a securitization vehicle,
as prescribed by any other specific contractual provision agreed upon,
or any other liability, duty, or other fiduciary obligation set forth
under any--
(1) law or regulation of the United States;
(2) law or regulation of any State or political subdivision
of any State; or
(3) established and approved standards for best practices
of any industry or trade group.
(f) Effective Period.--This section shall apply only with respect
to qualified loan modification or workout plans initiated prior to
January 1, 2012.
A:
Mortgage Enhancement and Modification Act of 2008 - Establishes a standard for loan modifications or workout plans for pools of certain residential mortgage loans.

States that a servicer of such pooled loans owes a duty to the securitization vehicle to maximize, or not negatively affect, the recovery of total proceeds from such loans for the benefit of all investors and holders of beneficial interests in the pooled loans, in the aggregate, and not to any individual party or group of parties.

Deems the loan servicer to be acting on behalf of the securitization vehicle in the best interest of all such investors and holders if the servicer: (1) makes reasonable, documented efforts to implement a modification or workout plan for a loan in or facing payment default; or (2) engages in other loss mitigation efforts, if the former efforts fail or the plan would be infeasible, in the reasonable belief that such efforts will maximize the net present value to be realized over that which would be realized through foreclosure.

Declares, furthermore, that a servicer shall be deemed to be acting on behalf of the securitization vehicle in the best interest of all investors and beneficial interest holders if the servicer makes efforts to: (1) contact proactively borrowers approaching a calendar date in which a predetermined or contractually established rate of interest shall increase or fluctuate in accordance with specified indicators or within a predetermined range; and (2) determine the borrower's ability to make payments following a reset of interest rates, whether the borrower is in danger of default or disclosure, and whether a loan modification or other mitigation effort is appropriate.

Declares that, absent specific contractual provisions to the contrary, a servicer acting in a manner consistent with such duty shall not be liable to specified persons for entering into a qualified loan modification or workout plan for loss mitigation purposes.