Amends the Federal Deposit Insurance Act and the Emergency Economic Stabilization Act of 2008 (EESA) to make permanent the increase in the standard maximum deposit insurance amount from $100,000 to $250,000.
Extends from five years to eight years after implementation of a Deposit Insurance Fund (DIF) restoration plan the deadline by which the DIF reserve ratio must meet or exceed the required minimum of 1.15% of estimated insured deposits.
Increases the borrowing authority of the Federal Deposit Insurance Corporation (FDIC) from a maximum $30 billion to $100 billion.
Extends to depository institution holding companies liability for special assessments to recover loss to the DIF arising from certain actions taken or assistance provided to avoid serious adverse effects on economic conditions or financial stability.
Amends the National Housing Act to revise certain requirements for the HOPE for Homeowners Program.
Repeals the requirement that the current borrower have, or is likely to have, a mortgage debt-to-income ratio greater than 31% (or any higher amount the Federal Home Loan Bank Board determines appropriate).
Increases from 90% to 93% of a property's appraised value the cap on the principal obligation amount of a refinanced eligible insured mortgage.
Repeals the prohibitions on: (1) second liens; and (2) payment of insurance benefits to a mortgagee in any case in which a mortgagor fails to make the first payment on a refinanced eligible mortgage.
Reduces the annual premium for a refinanced eligible insured mortgage, and allows its further reduction or termination during the mortgage term.
Repeals the entitlement of the Secretary of Housing and Urban Development and the mortgagor of an eligible insured mortgage, upon any sale or disposition of the subject property, to 50% of any appreciation in the property's appraised value since the date that the mortgage was insured.
Authorizes the Federal Home Loan Bank Board to establish a payment to the servicer of the existing senior mortgage for every loan insured under the HOPE for Homeowners Program.
Prescribes requirements (safe harbor) that will render a mortgage servicer not liable for entering into a loan modification or workout plan with respect to any mortgage on which: (1) default has occurred or is reasonably foreseeable; (2) the property securing it is occupied by the mortgagor; and (3) the servicer reasonably and in good faith believes that the anticipated recovery on the mortgage's principal outstanding obligation under a particular mortgage modification, workout plan, or other loss mitigation action will exceed, on a net present value basis, the anticipated recovery on the principal outstanding obligation to be realized through foreclosure.
Requires the Secretary of the Treasury to take prompt action to provide EESA Troubled Asset Relief Program (TARP) assistance to smaller community financial institutions, including privately held institutions.
[Congressional Bills 111th Congress]
[From the U.S. Government Printing Office]
[H.R. 703 Introduced in House (IH)]
111th CONGRESS
1st Session
H. R. 703
To promote bank liquidity and lending through deposit insurance, the
HOPE for Homeowners Program, and other enhancements.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 27, 2009
Mr. Frank of Massachusetts introduced the following bill; which was
referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To promote bank liquidity and lending through deposit insurance, the
HOPE for Homeowners Program, and other enhancements.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. PERMANENT INCREASE IN DEPOSIT INSURANCE.
(a) Amendments to Federal Deposit Insurance Act.--Section 11(a)(1)
of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)) is amended--
(1) in paragraph (1)(E), by striking ``$100,000'' and
inserting ``$250,000'';
(2) in paragraph (1)(F)(i), by striking ``2010'' and
inserting ``2015'';
(3) in subclause (I) of paragraph (1)(F)(i), by striking
``$100,000'' and inserting ``$250,000'';
(4) in subclause (II) of paragraph (1)(F)(i), by striking
``the calendar year preceding the date this subparagraph takes
effect under the Federal Deposit Insurance Reform Act of 2005''
and inserting ``calendar year 2008''; and
(5) in paragraph (3)(A)(iii), by striking ``, except that
$250,000 shall be substituted for $100,000 wherever such term
appears in such paragraph''.
(b) Repeal of EESA Provision.--Section 136 of the Emergency
Economic Stabilization Act (Public Law 110-343; 122 Stat. 3765) is
hereby repealed.
(c) Amendment to Federal Credit Union Act.--Section 207(k) of the
Federal Credit Union Act (12 U.S.C. 1787(k)) is amended--
(1) in paragraph (3)--
(A) by striking the opening quotation mark before
``$250,000'';
(B) by striking ``, except that $250,000 shall be
substituted for $100,000 wherever such term appears in
such section''; and
(C) by striking the closing quotation mark after
the closing parenthesis; and
(2) in paragraph (5), by striking ``$100,000'' and
inserting ``$250,000''.
SEC. 2. EXTENSION OF RESTORATION PLAN PERIOD.
Section 7(b)(3)(E)(ii) of the Federal Deposit Insurance Act (12
U.S.C. 1817(b)(3)(E)(ii)) is amended by striking ``5-year period'' and
inserting ``8-year period''.
SEC. 3. FDIC BORROWING AUTHORITY.
Section 14(a) of the Federal Deposit Insurance Act (12 U.S.C.
1824(a)) is amended--
(1) by striking ``$30,000,000,000'' and inserting
``$100,000,000,000''; and
(2) by inserting prior to the last sentence, the following
new sentence: ``The Corporation may request in writing to
borrow, and the Secretary may authorize and approve the
borrowing of, additional amounts above $100,000,000,000 to the
extent that the Board of Directors and the Secretary determine
such borrowing to be necessary.''.
SEC. 4. FDIC SYSTEMIC RISK SPECIAL ASSESSMENTS.
Section 13(c)(4)(G)(ii) of the Federal Deposit Insurance Act (12
U.S.C. 1823(c)(4)(G)(ii)) is amended to read as follows:
``(ii) Repayment of loss.--
``(I) In general.--The Corporation
shall recover the loss to the Deposit
Insurance Fund arising from any action
taken or assistance provided with
respect to an insured depository
institution under clause (i) from 1 or
more special assessments on insured
depository institutions, depository
institution holding companies (with the
concurrence of the Secretary of the
Treasury with respect to holding
companies), or both, as the Corporation
determines to be appropriate.
``(II) Treatment of depository
institution holding companies.--For
purposes of this clause, sections
7(c)(2) and 18(h) shall apply to
depository institution holding
companies as if they were insured
depository institutions.
``(III) Regulations.--The
Corporation shall prescribe such
regulations as it deems necessary to
implement this clause. In prescribing
such regulations, defining terms, and
setting the appropriate assessment rate
or rates, the Corporation shall
consider: the types of entities that
benefit from any action taken or
assistance provided under this
subparagraph; economic conditions; the
effects on the industry; and such other
factors as the Corporation deems
appropriate.''.
SEC. 5. CHANGES TO HOPE FOR HOMEOWNERS PROGRAM.
Section 257 of the National Housing Act (12 U.S.C. 1715z-23) is
amended--
(1) in subsection (e)--
(A) in paragraph (1), by striking subparagraph (B);
(B) in paragraph (2)(B), by striking ``90 percent''
and inserting ``93 percent'';
(C) by striking paragraph (7); and
(D) by redesignating paragraphs (8), (9), (10), and
(11) as paragraphs (7), (8), (9), and (10),
respectively;
(2) in subsection (h)(2), by striking ``, or in any case in
which a mortgagor fails to make the first payment on a
refinanced eligible mortgage'';
(3) by striking subsection (i) and inserting the following
new subsection:
``(i) Annual Premiums.--
``(1) In general.--For each refinanced eligible mortgage
insured under this section, the Secretary shall establish and
collect an annual premium in an amount equal to not less than
0.55 percent of the amount of the remaining insured principal
balance of the mortgage and not more than 0.75 percent of such
remaining insured principal balance, as determined according to
a schedule established by the Board that assigns such annual
premiums based upon the credit risk of the mortgage.
``(2) Reduction or termination during mortgage term.--
Notwithstanding paragraph (1), the Secretary may provide that
the annual premiums charged for refinanced eligible mortgages
insured under this section are reduced over the term of the
mortgage or that the collection of such premiums is
discontinued at some time during the term of the mortgage, in a
manner that is consistent with policies for such reduction or
discontinuation of annual premiums charged for mortgages in
accordance with section 203(c).'';
(4) in subsection (k)--
(A) by striking the subsection heading and
inserting ``Exit Fee'';
(B) in paragraph (1), in the matter preceding
subparagraph (A), by striking ``such sale or
refinancing'' and inserting ``the mortgage being
insured under this section''; and
(C) by striking paragraph (2);
(5) in subsection (s)(3)(A)(ii), by striking ``subsection
(e)(1)(B) and such other'' and inserting ``such'';
(6) in subsection (v), by inserting after the period at the
end the following: ``The Board shall conform documents, forms,
and procedures for mortgages insured under this section to
those in place for mortgages insured under section 203(b) to
the maximum extent possible consistent with the requirements of
this section.'';
(7) in subsection (w)(1)(C), by striking ``(e)(4)(A)'' and
inserting ``(e)(3)(A)''; and
(8) by adding at the end the following new subsection:
``(x) Payment to Existing Loan Servicer.--The Board may establish a
payment to the servicer of the existing senior mortgage for every loan
insured under the HOPE for Homeowners Program.''.
SEC. 6. SERVICER SAFE HARBOR.
(a) Safe Harbor.--
(1) Loan modifications and workout plans.--Notwithstanding
any other provision of law, and notwithstanding any investment
contract between a servicer and a securitization vehicle or
investor, a servicer that acts consistent with the duty set
forth in section 129A(a) of Truth in Lending Act (15 U.S.C.
1639a) shall not be liable for entering into a loan
modification or workout plan with respect to any such mortgage
that meets all of the criteria set forth in paragraph (2)(B)
to--
(A) 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;
(B) any person who is obligated to make payments
determined in reference to any loan or any interest
referred to in subparagraph (A); or
(C) any person that insures any loan or any
interest referred to in subparagraph (A) under any law
or regulation of the United States or any law or
regulation of any State or political subdivision of any
State.
(2) Ability to modify mortgages.--
(A) Ability.--Notwithstanding any other provision
of law, and notwithstanding any investment contract
between a servicer and a securitization vehicle or
investor, a servicer--
(i) shall not be limited in the ability to
modify mortgages, the number of mortgages that
can be modified, the frequency of loan
modifications, or the range of permissible
modifications; and
(ii) shall not be obligated to repurchase
loans from or otherwise make payments to the
securitization vehicle on account of a
modification, workout, or other loss mitigation
plan for a residential mortgage or a class of
residential mortgages that constitute a part or
all of the mortgages in the securitization
vehicle,
if any mortgage so modified meets all of the criteria
set forth in subparagraph (B).
(B) Criteria.--The criteria under this subparagraph
with respect to a mortgage are as follows:
(i) Default on the payment of such mortgage
has occurred or is reasonably foreseeable.
(ii) The property securing such mortgage is
occupied by the mortgagor of such mortgage.
(iii) The servicer reasonably and in good
faith believes that the anticipated recovery on
the principal outstanding obligation of the
mortgage under the particular modification or
workout plan or other loss mitigation action
will exceed, on a net present value basis, the
anticipated recovery on the principal
outstanding obligation of the mortgage to be
realized through foreclosure.
(3) Applicability.--This subsection shall apply only with
respect to modifications, workouts, and other loss mitigation
plans initiated before January 1, 2012.
(b) Reporting.--Each servicer that engages in loan modifications or
workout plans subject to the safe harbor in subsection (a) shall report
to the Secretary on a regular basis regarding the extent, scope and
results of the servicer's modification activities. The Secretary shall
prescribe regulations specifying the form, content, and timing of such
reports.
(c) Definition of Securitization Vehicles.--For purposes of this
section, the term ``securitization vehicle'' means a trust,
corporation, partnership, limited liability entity, special purpose
entity, or other structure that--
(1) 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
(2) holds such mortgages.
SEC. 7. AVAILABILITY OF TARP FUNDS TO SMALLER COMMUNITY INSTITUTIONS.
(a) Prompt Action.--The Secretary shall promptly take all necessary
actions to provide assistance under title I of the Emergency Economic
Stabilization Act of 2008 to smaller community financial institutions,
including such institutions that are privately held.
(b) Comparable Terms.--An institution that receives assistance
after the date of the enactment of the this Act, shall do so on terms
comparable to the terms applicable to institutions that received
assistance prior to the date of the enactment of this Act if the
institution--
(1) has submitted an application on which no action has
been taken, such as institutions that are C corporations
(including privately held institutions) and community
development financial institutions; or
(2) is of a type for which the Secretary has not yet
established an application deadline or for which any such
deadline has not yet occurred as of the date of the enactment
of this Act, such as institutions that are non-stock
corporations, S-corporations, mutually owned insured depository
institutions (as defined in section 3 of the Federal Deposit
Insurance Act).
(c) Definitions.--For purposes of this section, the terms ``S
Corporation'' and ``C Corporation'' shall have the same meaning given
to those terms in section 1361(a) of the Internal Revenue Code of 1986.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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