Homeowners Preservation of Equity Act of 2006 - Directs the Secretary of the Treasury, in consultation with federal banking agencies, the National Credit Union Administration, and the appropriate state bank supervisors of each state contained in whole or in part in the GO Zone (as defined by the Internal Revenue Code), to establish a program to provide temporary emergency mortgage payments on behalf of an eligible individual whose principal residence was significantly damaged or made uninhabitable by Hurricane Katrina or related flooding.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4991 Introduced in House (IH)]
109th CONGRESS
2d Session
H. R. 4991
To require the Secretary of the Treasury to carry out a program to
temporarily make payments under residential mortgage loans for
properties significantly damaged by Hurricane Katrina.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 16, 2006
Mr. Jefferson (for himself, Mr. Taylor of Mississippi, Mr. Melancon,
Mr. Davis of Alabama, Mr. Bishop of Georgia, Mr. McDermott, Mr. Ford,
Mr. Watt, Mr. Owens, Ms. Kilpatrick of Michigan, and Mr. Towns)
introduced the following bill; which was referred to the Committee on
Financial Services
_______________________________________________________________________
A BILL
To require the Secretary of the Treasury to carry out a program to
temporarily make payments under residential mortgage loans for
properties significantly damaged by Hurricane Katrina.
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 ``Homeowners Preservation of Equity
Act of 2006''.
SEC. 2. HURRICANE KATRINA MORTGAGE PROTECTION PROGRAM.
(a) In General.--The Secretary of the Treasury, in consultation
with the Federal banking agencies, the National Credit Union
Administration, and the appropriate State bank supervisors of each
State contained in whole or in part in the GO Zone, shall establish a
program to provide emergency mortgage assistance through the provision
of direct mortgage payments on behalf of eligible individuals.
(b) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Consumer mortgage.--The term ``consumer mortgage''
means any consumer credit transaction (which term shall have
the same meaning given such term for purposes of the Truth in
Lending Act) in which a security interest, including any such
interest arising by operation of law, is retained or acquired
in any property that is used as the principal dwelling (under
the meaning given such term for purposes of section 121 of the
Internal Revenue Code of 1986) of the person to whom credit is
extended.
(2) Consumer mortgage payment.--The term ``consumer
mortgage payment'' means the scheduled payment on a consumer
mortgage for principal, interest, and any scheduled deposit in
an escrow account for the purpose of ensuring payment of taxes,
insurance, or other charges with respect to the property
securing such consumer mortgage.
(3) Eligible consumer mortgage.--The term ``eligible
consumer mortgage'' means a consumer mortgage that meet the
following requirements:
(A) Timing.--The mortgage was entered into before
August 29, 2005.
(B) Good standing.--As of August 28, 2005, the
mortgage was not in foreclosure.
(C) Property requirements.--The property in which a
security interest was retained or acquired under the
mortgage--
(i) was designed principally as a one- to
four-family residence;
(ii) was located in the GO Zone;
(iii) was, as of August 28, 2005, the
primary residence of the mortgagor; and
(iv)(I) was significantly damaged by
Hurricane Katrina or by flooding resulting from
Hurricane Katrina; or
(II) is uninhabitable as a result of damage
or flooding resulting from Hurricane Katrina,
including uninhabitability resulting from lack
of electricity, water, or other services due to
such damage or flooding.
(D) Servicer agreements.--The servicer for the
mortgage has made such assurances as the Secretary
shall require to ensure that the servicer will comply
with the requirements of subsection (h).
(4) Eligible individual.--The term ``eligible individual''
means an individual--
(A) who is a citizen, national, or qualified alien
as defined in section 431(b) of the Personal
Responsibility and Work Opportunity Reconciliation Act
of 1996 (8 U.S.C. 1641(b));
(B) who was a mortgagor on an eligible consumer
mortgage;
(C) whose ability to continue meeting the consumer
mortgage payment obligations under the eligible
consumer mortgage was severely impaired as a result of
hurricane-related disruption in the GO Zone, as
determined in accordance with a standard established by
the Secetary that compares the debt of the individual
to the income of the individual; and
(D) who has agreed to the terms for repayment of
assistance under subsection (i).
(5) Federal banking agency and state bank supervisor.--The
terms ``Federal banking agency'' and ``State bank supervisor''
have the meanings given such terms in section 3 of the Federal
Deposit Insurance Act.
(6) GO zone.--The term ``GO Zone'' has the meaning given
such term in section 1400M of the Internal Revenue Code of
1986)
(7) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(8) Servicer.--The term ``servicer'', with respect to a
consumer mortgage, has the meaning given such term in section
6(i) of the Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2605(i)).
(9) Habitable; uninhabitable.--
(A) In general.--The terms ``habitable'' and
``uninhabitable'' mean, with respect to a residence,
that the residence has been determined to be fit or not
to be fit, respectively, for human habitation.
(B) Determination.--The Secretary shall, by
regulations pursuant to subsection (l), establish
procedures and standards for determinations of
habitability and uninhabitability for purposes of the
program under this section. Such standards shall take
into consideration determinations and declarations of
habitability and unihabitability by Federal and State
and local governments or agencies, including the
Federal Emergency Management Agency and State and local
disaster relief agencies, and by insurers, access or
lack thereof to necessary infrastructure or services,
including electricity, potable water, and waste water
service, and such other factors as the Secretary
considers appropriate.
(c) Mortgage Payment Relief Program.--The Secretary shall design
and implement the program under this section in a manner that provides
that assistance to be paid by the Secretary with respect to an eligible
consumer mortgage and on behalf of an eligible individual is paid
directly to the servicer for such mortgage.
(d) Period of Assistance.--Payments under the program under this
section with respect to an eligible consumer mortgage may be made only
for consumer mortgage payments due under such mortgage during the
period beginning on August 28, 2005, and ending on the earlier of--
(1) March 1, 2007, or
(2) the expiration of the 60-day period beginning upon the
the date that the eligible individual first reoccupies the
property subject to the mortgage.
(e) Limitations on Payments.--
(1) In general.--Subject to subsection (f), in no case may
the value of the assistance provided under the program under
this section with respect to any eligible consumer mortgage
exceed the aggregate amount of the consumer mortgage payments
due under the mortgage during the period for which assistance
is provided for such mortgage under the program.
(2) No double payments.--The Secretary shall take
appropriate actions to ensure that, in the case of any consumer
mortgage payment paid by an eligible individual on an eligible
consumer mortgage for any period for which payment has already
been made under the program under this section, the servicer of
the consumer mortgage shall return such payment within a
reasonable period of time or shall immediately credit such
payment toward amortization of the principal obligation under
the mortgage and promptly notify the eligible individual of
such credit.
(3) Terms of payment.--For purposes of this section, the
amount of any consumer mortgage payment shall be equal to the
amount of such payment due under the terms of such consumer
mortgage as in effect on August 28, 2005.
(4) Prohibition of fees and charges.--Payments under the
program under this section may not be made to the servicer of a
consumer mortgage that provides for any penalites, fees,
charges, additional interest, or servicing costs of any kind
attributable to--
(A) participation in the program under this
section;
(B) any prepayment of consumer mortgage, including
prepayment involving application of insurance proceeds
to the mortgage; or
(C) late payment of any consumer mortgage payment
due under the consumer mortgage during the period
beginning on August 28, 2005, and ending on the
commencement of payments under this section for the
mortgage.
(5) Reversal of adverse actions already taken.--Payments
under the program under this section may not be made to the
servicer of a consumer mortgage if, during the period beginning
on August 29, 2005, and ending upon the enrollment of the
consumer mortgage in the program, the servicer has furnished to
any consumer reporting agency (as such term is defined in
section 603 of the Fair Credit Reporting Act) any information
that relates to such consumer mortgage or the mortgagor under
such mortgage and is adverse to the interests of the mortgagor
and has failed to withdraw or remove such information from the
consumer reporting agency.
(f) Enrollment in Program.--
(1) Expedited process.--The Secretary shall establish an
expedited process, in accordance with this subsection, for the
enrollment of eligible individuals in the program under this
section.
(2) Notification.--To be eligible to receive payments under
the program under this section, the servicer of a consumer
mortgage shall notify the Secretary--
(A) of the nonpayment of a scheduled consumer
mortgage payment from an individual in GO Zone, not
earlier than 31 days following such nonpayment; or
(B) of a communication to the servicer by an
individual reasonably indicating eligibility for
assistance under the program, after such communication.
(3) Enrollment.--The Secretary, upon receipt of a notice
under paragraph (2) regarding a consumer mortgage, shall enroll
the eligible individual involved in the program under this
section, subject to the servicer of the mortgage submitting
such confirmation to the Secretary as the Secretary shall
require that the servicer has verified, in accordance with such
procedures as the Secretary shall establish, that mortgagor
under such consumer mortgage is an eligible individual and that
the consumer mortgage is an eligible consumer mortgage.
(4) Duty of servicer.--The servicer of a consumer mortgage
shall make a reasonable effort to notify an eligible
individual--
(A) of the enrollment of such individual in the
program under paragraph (3);
(B) that, if it is later determined that the
individual is not an eligible individual or the
consumer mortgage is not an eligible consumer mortgage
(as determined by the audit process under subsection
(g) or otherwise), such servicer may be required at a
later date to repay the program for the total amount of
consumer mortgage payments made by the Secretary on
behalf of such individual, but that there shall be no
liability on the part of the individual to repay the
program for such amounts; and
(C) that such individual may elect to decline
enrollment, or cancel enrollment, in the program by
notifying the servicer involved.
(g) Retrospective Audit.--
(1) In general.--The Secretary shall provide for the
performance of an appropriate audit of the program under this
section by a date that is not later than 180 days after the
date of the enactment of this Act.
(2) Repayment of improperly provided funds.--
(A) Action by secretary.--If the Secretary
determines, pursuant to the audit under paragraph (1)
or otherwise, that an individual that was enrolled in
the program under this section was not an eligible
individual under subsection (b) or the consumer
mortgage was not an eligible consumer mortgage, the
Secretary shall seek repayment from the servicer of the
consumer mortgage of the amounts paid under the program
on behalf of such individual. Such individual shall not
be liable to the Secretary for the repayment of such
amounts paid under the program on behalf of the
individual.
(B) Terms of repayment.--Any repayment pursuant to
subparagraph (A) shall be made with no interest or late
penalty to accrue prior to the commencement of a
repayment period which shall begin not earlier than the
date that is 3 months after the date on which a
determination and notice of noneligibility is provided.
(h) Prohibited Actions.--During the period that payments are made
under the program under this section for an eligible consumer loan, a
servicer who accepts payments under the program under this section with
respect to any eligible consumer mortgage, and any person who makes or
holds such eligible consumer mortgage (if other than the servicer), may
not--
(1) accelerate the maturity of or commence any legal action
regarding such mortgage (including mortgage foreclosure to
recover under such obligation) or take possession of any
security of the mortgagor for such eligible consumer mortgage
obligation;
(2) increase the annual percentage rate of interest with
respect to such eligible consumer mortgage, except in the case
of any mortgage the terms of which provide for changes in the
rate of interest that are not made in connection with
delinquency, default, or other credit-related events;
(3) refuse to accept, prevent, or otherwise limit the
prepayment (in whole or in part) of any outstanding principal
amount due under the mortgage, including prepayment involving
application of any insurance proceeds; or
(4) impose any other fees or charges with respect to such
consumer mortgage, including any fees or charges for any
prepayment described in paragraph (3).
(i) Repayment of Assistance Amounts.--Assistance under the program
under this section may not be provided with respect to a consumer
mortgage unless the eligible individual who is the mortgagor under such
mortgage enters into an agreement with the Secretary that the aggregate
amount of all such assistance provided for such mortgage will be repaid
to the Secretary, together with interest on such amounts, as follows:
(1) Interest.--The interest on amounts of assistance
provided under the program shall accrue at a rate, as
determined by the Secretary, that is equal to 50 percent of the
average rate payable by the Treasury on its obligations having
a 5-year term to maturity and outstanding as of September 1,
2005, until full repayment is made.
(2) Silent second mortgage.--Amounts of assistance and
interest shall be secured by a lien on the property in the
aggregate amount of such assistance and interest, that is held
by the Secretary and shall be subordinate to all other
mortgages on the property and to any Federal tax lien, but
shall be superior to any other lien. The lien shall be
extinguished upon sale or transfer of the property by the
mortgagor and the payment to the Secretary from the proceeds of
such sale or transfer of the aggregate amount of such
assistance and interest. The Secretary may not require the
mortgagor to repay any amount of assistance or interest until
the property is sold or otherwise transferred.
(3) Prepayment.--Notwithstanding the third sentence of
paragraph (2), the mortgagor may make payments, in whole or in
part, of amounts of assistance and interest owed to the
Secretary pursuant to this subsection at any time after
payments under this section on behalf of the mortgagor have
concluded and no penalty, fee, or charge may be imposed for any
payments made before sale or transfer of the property by the
mortgagor.
(4) Secondary market.--The Secretary may sell and otherwise
deal in liens established under this section, and may issue and
guarantee securities backed by liens established under this
section, as the Secretary considers appropriate.
(j) Penalties.--
(1) In general.--In the case of each consumer mortgage that
is submitted under subsection (f) to the Secretary by a
servicer and confirmed by the servicer as eligible for
participation in the program under this section that is not an
eligible consumer mortgage or for which the mortgagor is not an
eligible individual, the Secretary may assess to the servicer,
for each such mortgage so submitted--
(A) a civil penalty in an amount not exceeding the
amount of any mortgage payments received as a
consequence of submission of such ineligible mortgage
or individual; and
(B) interest, at a rate determined by the
Secretary, for the period that any amounts improperly
paid under the program on behalf of such mortgage were
held by the servicer.
(2) Intentional violations.--If the Secretary determines
that any submission of a mortgage to which paragraph (1)
applies was made with intentional or reckless disregard of the
requirements under subsection (f)(3) regarding verification
procedures or with actual knowledge that the consumer mortgage
or the mortgagor under the consumer mortgage was not eligible
for assistance under the program under this section, the
Secretary may assess to the servicer, for each such mortgage so
submitted--
(A) a civil penalty in an amount not exceeding
three times the amount of any mortgage payments
received as a consequence of submission of such
ineligible mortgage or individual; and
(B) interest, at a rate determined by the
Secretary, for the period that any amounts improperly
paid under the program on behalf of such mortgage were
held by the servicer.
(3) Effect on other law.--The penalties under this
subsection shall be in addition to any other remedies and
penalties provided by other provisions of Federal and State
law, including any civil and criminal penalties for fraud and
false statements.
(k) Exclusion of Mortgage Relief Payments From Income of
Mortgagor.--Any amounts paid under the program under this section with
respect to an eligible consumer mortgage shall not be included as gross
income of the eligible individual who is the mortgagor under such
mortgage for purposes of the Internal Revenue Code of 1986 or for any
other program for benefits, payments, or assistance for an individual,
household, or family eligiblity unit provided by any Federal or State
agency or by appropriated funds of the United States or any State, for
which eligibility is determined on the basis of income or assets or any
other test of means.
(l) Expedited Rulemaking.--The Secretary shall utilize expedited
rulemaking procedures to carry out this section.
(m) Authorization of Appropriations.--There are authorized to be
appropriated such sums as may be necessary for fiscal years 2006 and
2007 to carry out this section.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line