Home Foreclosure Reduction Act of 2013 - Amends federal bankruptcy law governing a Chapter 13 debtor (adjustment of debts of an individual with regular income) to exclude from the computation of debts the secured or unsecured portions of: (1) debts secured by the debtor's principal residence if the value of the residence is less than the applicable maximum amount of noncontingent, liquidated, secured debts; or (2) debts secured or formerly secured by the debtor's principal residence that was either sold in foreclosure or surrendered to the creditor if the property's value was less than the applicable maximum amount of noncontingent, liquidated, secured debts.
Applies the credit counseling requirement to a Chapter 13 debtor who certifies receipt of notice that the holder of a claim secured by the debtor's principal residence may commence a foreclosure on it.
Requires the court to disallow a claim that is subject to any remedy for rescission under the Truth in Lending Act, notwithstanding the prior entry of a foreclosure judgment.
Permits a Chapter 13 bankruptcy plan to modify the rights of claim holders with respect to a claim for a loan originated before the effective date of this Act and secured by a security interest in the debtor's principal residence that is the subject of a foreclosure notice.
Authorizes reduction of a claim secured by the debtor's principal residence, but only in specified circumstances, particularly if the debtor sells the residence.
Permits a Chapter 13 bankruptcy plan to deny debtor liability for certain fees and charges incurred while the bankruptcy case is pending and arising from a debt secured by the debtor's principal residence, unless the claim holder observes specified requirements.
Adds to conditions for court confirmation of a plan in bankruptcy that: (1) the holder of a claim secured by the debtor's principal residence retain the lien securing the claim until the later of the payment of the claim as reduced and modified, completion of all payments under the plan, or the discharge of a debtor from all debts; and (2) the plan modifies the claim in good faith and the court does not find that the debtor has been convicted of obtaining by actual fraud the extension, renewal, or refinancing of credit that gives rise to a modified claim.
Authorizes the court, upon request, to confirm a plan proposing a reduction in the interest rate on the loan secured by such security interest and that does not reduce the principal, if certain requirements are met.
Excludes from the final discharge of a debtor from all debts any unpaid portion of such a claim as reduced.
Amends the federal judicial code to prescribe standing trustee fees regarding certain payments received under a Chapter 13 bankruptcy plan.
Instructs the Comptroller General to study: (1) the number of Chapter 13 debtors who filed, during the year following enactment of this Act, for the purpose of restructuring their principal residence mortgages; (2) the number of mortgages restructured under this Act that subsequently resulted in default and foreclosure; (3) a comparison between the effectiveness of mortgages restructured under programs outside of bankruptcy and mortgages restructured under this Act; (4) the number of cases presented to the bankruptcy courts where mortgages were restructured under this Act that were appealed; (5) the number of bankruptcy cases where mortgages were restructured under this Act that were overturned on appeal; (6) the number of bankruptcy judges disciplined as a result of actions taken to restructure mortgages under this Act; and (7) whether the amendments made by this Act should be amended to include a sunset clause.
Directs the Comptroller General to conduct: (1) a comprehensive review of the effects of the amendments made by this subtitle on the bankruptcy court, (2) a survey of whether the program should limit the types of homeowners eligible for the program, and (3) whether such amendments should remain in effect.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 101 Introduced in House (IH)]
113th CONGRESS
1st Session
H. R. 101
To amend title 11 of the United States Code with respect to
modification of certain mortgages on principal residences, and for
other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 3, 2013
Mr. Conyers (for himself, Mr. Cohen, Mr. Nadler, Mr. McDermott, Mr.
Scott of Virginia, Mr. Johnson of Georgia, and Ms. Jackson Lee)
introduced the following bill; which was referred to the Committee on
the Judiciary
_______________________________________________________________________
A BILL
To amend title 11 of the United States Code with respect to
modification of certain mortgages on principal residences, 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 ``Home Foreclosure Reduction Act of
2013''.
SEC. 2. DEFINITION.
Section 101 of title 11, United States Code, is amended by
inserting after paragraph (43) the following (and make such technical
and conforming changes as may be appropriate):
``(43A) The term `qualified loan modification' means a loan
modification agreement made in accordance with the guidelines
of the Obama Administration's Homeowner Affordability and
Stability Plan as implemented March 4, 2009, that--
``(A) reduces the debtor's payment (including
principal and interest, and payments for real estate
taxes, hazard insurance, mortgage insurance premium,
homeowners' association dues, ground rent, and special
assessments) on a loan secured by a senior security
interest in the principal residence of the debtor, to a
percentage of the debtor's income in accordance with
such guidelines, without any period of negative
amortization or under which the aggregate amount of the
regular periodic payments would not fully amortize the
outstanding principal amount of such loan;
``(B) requires no fees or charges to be paid by the
debtor in order to obtain such modification; and
``(C) permits the debtor to continue to make
payments under the modification agreement
notwithstanding the filing of a case under this title,
as if such case had not been filed.''.
SEC. 3. ELIGIBILITY FOR RELIEF.
Section 109 of title 11, United States Code, is amended--
(1) by adding at the end of subsection (e) the following:
``For purposes of this subsection, the computation of debts
shall not include the secured or unsecured portions of--
``(1) debts secured by the debtor's principal residence if
the value of such residence as of the date of the order for
relief under chapter 13 is less than the applicable maximum
amount of noncontingent, liquidated, secured debts specified in
this subsection; or
``(2) debts secured or formerly secured by what was the
debtor's principal residence that was sold in foreclosure or
that the debtor surrendered to the creditor if the value of
such real property as of the date of the order for relief under
chapter 13 was less than the applicable maximum amount of
noncontingent, liquidated, secured debts specified in this
subsection.'', and
(2) by adding at the end of subsection (h) the following:
``(5) Notwithstanding the 180-day period specified in
paragraph (1), with respect to a debtor in a case under chapter
13 who submits to the court a certification that the debtor has
received notice that the holder of a claim secured by the
debtor's principal residence may commence a foreclosure on the
debtor's principal residence, the requirements of paragraph (1)
shall be considered to be satisfied if the debtor satisfies
such requirements not later than the expiration of the 30-day
period beginning on the date of the filing of the petition.''.
SEC. 4. PROHIBITING CLAIMS ARISING FROM VIOLATIONS OF THE TRUTH IN
LENDING ACT.
Section 502(b) of title 11, United States Code, is amended--
(1) in paragraph (8) by striking ``or'' at the end,
(2) in paragraph (9) by striking the period at the end and
inserting ``; or'', and
(3) by adding at the end the following:
``(10) the claim for a loan secured by a security interest
in the debtor's principal residence is subject to a remedy for
rescission under the Truth in Lending Act notwithstanding the
prior entry of a foreclosure judgment, except that nothing in
this paragraph shall be construed to modify, impair, or
supersede any other right of the debtor.''.
SEC. 5. AUTHORITY TO MODIFY CERTAIN MORTGAGES.
Section 1322 of title 11, United States Code, is amended--
(1) in subsection (b)--
(A) by redesignating paragraph (11) as paragraph
(12),
(B) in paragraph (10) by striking ``and'' at the
end, and
(C) by inserting after paragraph (10) the
following:
``(11) notwithstanding paragraph (2), with respect to a
claim for a loan originated before the effective date of this
paragraph and secured by a security interest in the debtor's
principal residence that is the subject of a notice that a
foreclosure may be commenced with respect to such loan, modify
the rights of the holder of such claim (and the rights of the
holder of any claim secured by a subordinate security interest
in such residence)--
``(A) by providing for payment of the amount of the
allowed secured claim as determined under section
506(a)(1);
``(B) if any applicable rate of interest is
adjustable under the terms of such loan by prohibiting,
reducing, or delaying adjustments to such rate of
interest applicable on and after the date of filing of
the plan;
``(C) by modifying the terms and conditions of such
loan--
``(i) to extend the repayment period for a
period that is no longer than the longer of 40
years (reduced by the period for which such
loan has been outstanding) or the remaining
term of such loan, beginning on the date of the
order for relief under this chapter; and
``(ii) to provide for the payment of
interest accruing after the date of the order
for relief under this chapter at a fixed annual
rate equal to the currently applicable average
prime offer rate as of the date of the order
for relief under this chapter, corresponding to
the repayment term determined under the
preceding paragraph, as published by the
Federal Financial Institutions Examination
Council in its table entitled `Average Prime
Offer Rates--Fixed', plus a reasonable premium
for risk; and
``(D) by providing for payments of such modified
loan directly to the holder of the claim or, at the
discretion of the court, through the trustee during the
term of the plan; and'', and
(2) by adding at the end the following:
``(g) A claim may be reduced under subsection (b)(11)(A) only on
the condition that if the debtor sells the principal residence securing
such claim, before completing all payments under the plan (or, if
applicable, before receiving a discharge under section 1328(b)) and
receives net proceeds from the sale of such residence, then the debtor
agrees to pay to such holder not later than 15 days after receiving
such proceeds--
``(1) if such residence is sold in the 1st year occurring
after the effective date of the plan, 90 percent of the amount
of the difference between the sales price and the amount of
such claim as originally determined under subsection (b)(11)
(plus costs of sale and improvements), but not to exceed the
unpaid amount of the allowed secured claim determined as if
such claim had not been reduced under such subsection;
``(2) if such residence is sold in the 2d year occurring
after the effective date of the plan, 70 percent of the amount
of the difference between the sales price and the amount of
such claim as originally determined under subsection (b)(11)
(plus costs of sale and improvements), but not to exceed the
unpaid amount of the allowed secured claim determined as if
such claim had not been reduced under such subsection;
``(3) if such residence is sold in the 3d year occurring
after the effective date of the plan, 50 percent of the amount
of the difference between the sales price and the amount of
such claim as originally determined under subsection (b)(11)
(plus costs of sale and improvements), but not to exceed the
unpaid amount of the allowed secured claim determined as if
such claim had not been reduced under such subsection;
``(4) if such residence is sold in the 4th year occurring
after the effective date of the plan, 30 percent of the amount
of the difference between the sales price and the amount of
such claim as originally determined under subsection (b)(11)
(plus costs of sale and improvements), but not to exceed the
unpaid amount of the allowed secured claim determined as if
such claim had not been reduced under such subsection; and
``(5) if such residence is sold in the 5th year occurring
after the effective date of the plan, 10 percent of the amount
of the difference between the sales price and the amount of
such claim as originally determined under subsection (b)(11)
(plus costs of sale and improvements), but not to exceed the
unpaid amount of the allowed secured claim determined as if
such claim had not been reduced under such subsection.
``(h) With respect to a claim of the kind described in subsection
(b)(11), the plan may not contain a modification under the authority of
subsection (b)(11)--
``(1) in a case commenced under this chapter after the
expiration of the 30-day period beginning on the effective date
of this subsection, unless--
``(A) the debtor certifies that the debtor--
``(i) not less than 30 days before the
commencement of the case, contacted the holder
of such claim (or the entity collecting
payments on behalf of such holder) regarding
modification of the loan that is the subject of
such claim;
``(ii) provided the holder of the claim (or
the entity collecting payments on behalf of
such holder) a written statement of the
debtor's current income, expenses, and debt
substantially conforming with the schedules
required under section 521(a) or such other
form as is promulgated by the Judicial
Conference of the United States for such
purpose; and
``(iii) considered any qualified loan
modification offered to the debtor by the
holder of the claim (or the entity collecting
payments on behalf of such holder); or
``(B) a foreclosure sale is scheduled to occur on a
date in the 30-day period beginning on the date of case
is commenced; and
``(2) in any other case pending under this chapter, unless
the debtor certifies that the debtor attempted to contact the
holder of such claim (or the entity collecting payments on
behalf of such holder) regarding modification of the loan that
is the subject of such claim, before--
``(A) filing a plan under section 1321 that
contains a modification under the authority of
subsection (b)(11); or
``(B) modifying a plan under section 1323 or 1329
to contain a modification under the authority of
subsection (b)(11).
``(i) In determining the holder's allowed secured claim under
section 506(a)(1) for purposes of subsection (b)(11)(A), the value of
the debtor's principal residence shall be the fair market value of such
residence on the date such value is determined and, if the issue of
value is contested, the court shall determine such value in accordance
with the appraisal rules used by the Federal Housing Administration.''.
SEC. 6. COMBATING EXCESSIVE FEES.
Section 1322(c) of title 11, United States Code, is amended--
(1) in paragraph (1) by striking ``and'' at the end,
(2) in paragraph (2) by striking the period at the end and
inserting a semicolon, and
(3) by adding at the end the following:
``(3) the debtor, the debtor's property, and property of
the estate are not liable for a fee, cost, or charge that is
incurred while the case is pending and arises from a debt that
is secured by the debtor's principal residence except to the
extent that--
``(A) the holder of the claim for such debt files
with the court and serves on the trustee, the debtor,
and the debtor's attorney (annually or, in order to
permit filing consistent with clause (ii), at such more
frequent periodicity as the court determines necessary)
notice of such fee, cost, or charge before the earlier
of--
``(i) 1 year after such fee, cost, or
charge is incurred; or
``(ii) 60 days before the closing of the
case; and
``(B) such fee, cost, or charge--
``(i) is lawful under applicable
nonbankruptcy law, reasonable, and provided for
in the applicable security agreement; and
``(ii) is secured by property the value of
which is greater than the amount of such claim,
including such fee, cost, or charge;
``(4) the failure of a party to give notice described in
paragraph (3) shall be deemed a waiver of any claim for fees,
costs, or charges described in paragraph (3) for all purposes,
and any attempt to collect such fees, costs, or charges shall
constitute a violation of section 524(a)(2) or, if the
violation occurs before the date of discharge, of section
362(a); and
``(5) a plan may provide for the waiver of any prepayment
penalty on a claim secured by the debtor's principal
residence.''.
SEC. 7. CONFIRMATION OF PLAN.
(a) Section 1325(a) of title 11, United States Code, is amended--
(1) in the matter preceding paragraph (1) strike
``subsection (b)'' and insert ``subsections (b) and (d)'',
(2) in paragraph (5)--
(A) by inserting ``except as otherwise provided in
section 1322(b)(11),'' after ``(5)'', and
(B) in subparagraph (B)(iii)(I) by inserting
``(including payments of a claim modified under section
1322(b)(11))'' after ``payments'' the first place it
appears,
(3) in paragraph (8) by striking ``and'' at the end,
(4) in paragraph (9) by striking the period at the end and
inserting a semicolon, and
(5) by inserting after paragraph (9) the following:
``(10) notwithstanding subclause (I) of paragraph
(5)(B)(i), whenever the plan modifies a claim in accordance
with section 1322(b)(11), the holder of a claim whose rights
are modified pursuant to section 1322(b)(11) shall retain the
lien until the later of--
``(A) the payment of such holder's allowed secured
claim; or
``(B) completion of all payments under the plan
(or, if applicable, receipt of a discharge under
section 1328(b)); and
``(11) whenever the plan modifies a claim in accordance
with section 1322(b)(11), the court finds that such
modification is in good faith (Lack of good faith exists if the
debtor has no need for relief under this paragraph because the
debtor can pay all of his or her debts and any future payment
increases on such debts without difficulty for the foreseeable
future, including the positive amortization of mortgage debt.
In determining whether a reduction of the principal amount of
the loan resulting from a modification made under the authority
of section 1322(b)(11) is made in good faith, the court shall
consider whether the holder of such claim (or the entity
collecting payments on behalf of such holder) has offered to
the debtor a qualified loan modification that would enable the
debtor to pay such debts and such loan without reducing such
principal amount.) and does not find that the debtor has been
convicted of obtaining by actual fraud the extension, renewal,
or refinancing of credit that gives rise to a modified
claim.''.
(b) Section 1325 of title 11, United States Code, is amended by
adding at the end the following (and make such technical and conforming
changes as may be appropriate):
``(d) Notwithstanding section 1322(b)(11)(C)(ii), the court, on
request of the debtor or the holder of a claim secured by a senior
security interest in the debtor's principal residence, may confirm a
plan proposing a reduction in the interest rate on the loan secured by
such security interest and that does not reduce the principal, provided
the total monthly mortgage payment is reduced to a percentage of the
debtor's income in accordance with the guidelines of the Obama
Administration's Homeowner Affordability and Stability Plan as
implemented March 4, 2009, if, taking into account the debtor's
financial situation, after allowance of expenses that would be
permitted for a debtor under this chapter subject to paragraph (3) of
subsection (b), regardless of whether the debtor is otherwise subject
to such paragraph, and taking into account additional debts and fees
that are to be paid in this chapter and thereafter, the debtor would be
able to prevent foreclosure and pay a fully amortizing 30-year loan at
such reduced interest rate without such reduction in principal.''.
SEC. 8. DISCHARGE.
Section 1328(a) of title 11, United States Code, is amended--
(1) by inserting ``(other than payments to holders of
claims whose rights are modified under section 1322(b)(11))''
after ``paid'', and
(2) in paragraph (1) by inserting ``or, to the extent of
the unpaid portion of an allowed secured claim, provided for in
section 1322(b)(11)'' after ``1322(b)(5)''.
SEC. 9. STANDING TRUSTEE FEES.
(a) Amendment to Title 28.--Section 586(e)(1)(B)(i) of title 28,
United States Code, is amended--
(1) by inserting ``(I) except as provided in subparagraph
(II)'' after ``(i)'',
(2) by striking ``or'' at the end and inserting ``and'',
and
(3) by adding at the end the following:
``(II) 4 percent with respect to payments
received under section 1322(b)(11) of title 11
by the individual as a result of the operation
of section 1322(b)(11)(D) of title 11, unless
the bankruptcy court waives all fees with
respect to such payments based on a
determination that such individual has income
less than 150 percent of the income official
poverty line (as defined by the Office of
Management and Budget, and revised annually in
accordance with section 673(2) of the Omnibus
Budget Reconciliation Act of 1981) applicable
to a family of the size involved and payment of
such fees would render the debtor's plan
infeasible.''.
(b) Conforming Provision.--The amendments made by this section
shall apply to any trustee to whom the provisions of section 302(d)(3)
of the Bankruptcy Judges, United States Trustees, and Family Farmer
Bankruptcy Act of 1986 (Public Law 99-554; 100 Stat. 3121) apply.
SEC. 10. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.
(a) Effective Date.--Except as provided in subsection (b), this
subtitle and the amendments made by this subtitle shall take effect on
the date of the enactment of this Act.
(b) Application of Amendments.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this subtitle shall apply with respect to
cases commenced under title 11 of the United States Code
before, on, or after the date of the enactment of this Act.
(2) Limitation.--Paragraph (1) shall not apply with respect
to cases closed under title 11 of the United States Code as of
the date of the enactment of this Act that are neither pending
on appeal in, nor appealable to, any court of the United
States.
SEC. 11. GAO STUDY.
The Comptroller General shall carry out a study, and submit to the
Committee on the Judiciary of the House of Representatives and the
Committee on the Judiciary of the Senate, not later than 2 years after
the date of the enactment of this Act a report containing--
(1) the results of such study of--
(A) the number of debtors who filed, during the 1-
year period beginning on the date of the enactment of
this Act, cases under chapter 13 of title 11 of the
United States Code for the purpose of restructuring
their principal residence mortgages,
(B) the number of mortgages restructured under the
amendments made by this subtitle that subsequently
resulted in default and foreclosure,
(C) a comparison between the effectiveness of
mortgages restructured under programs outside of
bankruptcy, such as Hope Now and Help for Homeowners,
and mortgages restructured under the amendments made by
this subtitle,
(D) the number of cases presented to the bankruptcy
courts where mortgages were restructured under the
amendments made by this subtitle that were appealed,
(E) the number of cases presented to the bankruptcy
courts where mortgages were restructured under the
amendments made by the subtitle that were overturned on
appeal, and
(F) the number of bankruptcy judges disciplined as
a result of actions taken to restructure mortgages
under the amendments made by this subtitle, and
(2) a recommendation as to whether such amendments should
be amended to include a sunset clause.
SEC. 12. REPORT TO CONGRESS.
Not later than 18 months after the date of the enactment of this
Act, the Comptroller General, in consultation with the Federal Housing
Administration, shall submit to the Congress, a report containing--
(1) a comprehensive review of the effects of the amendments
made by this subtitle on bankruptcy court,
(2) a survey of whether the program should limit the types
of homeowners eligible for the program, and
(3) a recommendation on whether such amendments should
remain in effect.
<all>
Introduced in House
Introduced in House
Sponsor introductory remarks on measure. (CR E1-3)
Referred to the House Committee on the Judiciary.
Referred to the Subcommittee on Regulatory Reform, Commercial And Antitrust Law.
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