National Homeowners Bill of Rights Act of 2014 - Amends the Real Estate Settlement Procedures Act of 1974 to require servicers of federally related mortgage loans to: (1) establish for each borrower's account a single electronic record accessible throughout the servicer, including its agents, and all its affordable loan modification staff, foreclosure staff, and bankruptcy staff; and (2) maintain a free, publicly accessible website where borrowers may check their estimated net present value.
Requires servicers to provide free oral interpretation services, as well as translated documents, upon borrower request, which may be provided by contracting with housing counseling agencies approved by the Department of Housing and Urban Development (HUD).
Prescribes requirements for the affordable loan modification process, including: (1) evaluation of borrowers facing imminent default, (2) assistance in applying for affordable loan modification, (3) treatment of successors in interest, (4) loan transfers, and (5) restrictions upon foreclosure proceedings.
Bars sale of the property securing the mortgage if the servicer of the mortgage does not file a certification with the appropriate land records office where the property securing the mortgage is located, stating that the servicer has determined the eligibility of the mortgagor for an affordable loan modification.
Prescribes criteria governing: (1) mortgagor's eligibility to participate in an affordable loan modification, (2) earned principal forgiveness, (3) principal reduction, and (4) treatment of junior liens.
Subjects a servicer who violates this Act to a civil penalty, and to liability to the borrower. Limits to $1 million the maximum penalty for all violations committed by any particular servicer during any one-year period.
Directs the Director of the Consumer Financial Protection Bureau (CFPB) to appoint a Mortgage Servicer Ombudsman.
Subjects to a maximum fine of $7,500 per loan a servicer who records or files with a land records office or a court more than one document with material deficiencies (robo-signing) with respect to a mortgage loan.
Extends indefinitely the Protecting Tenants at Foreclosure Act of 2009 by repealing its termination date.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4963 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 4963
To amend the Real Estate Settlement Procedures Act of 1974 to provide
protections to borrowers, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 25, 2014
Ms. Michelle Lujan Grisham of New Mexico (for herself and Ms. Kaptur)
introduced the following bill; which was referred to the Committee on
Financial Services
_______________________________________________________________________
A BILL
To amend the Real Estate Settlement Procedures Act of 1974 to provide
protections to borrowers, 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 ``National Homeowners Bill of Rights
Act of 2014''.
SEC. 2. SERVICER TREATMENT OF BORROWERS.
The Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601
et seq.) is amended by inserting after section 6 the following:
``SEC. 6A. SERVICER TREATMENT OF BORROWERS.
``(a) Servicer Requirements.--
``(1) Single electronic record and single point of
contact.--Each servicer of a federally related mortgage loan,
or agents of such servicer, shall, with respect to the
borrower, establish a single electronic record for each
account, the contents of which shall be accessible throughout
the servicer, or agents of such servicer, including to all
affordable loan modification staff, all foreclosure staff, and
all bankruptcy staff.
``(2) Availability of net present value information.--
Servicers shall maintain a free and publicly accessible website
where borrowers may check their estimated net present value.
``(b) Protections for Homeowners With Limited English
Proficiency.--
``(1) Free oral interpretation.--Servicers shall provide
free oral interpretation services for borrowers who request
such services and such services may be provided by contracting
with housing counseling agencies that are approved by the
Department of Housing and Urban Development and that have
appropriate language capacity.
``(2) Notation in file.--Servicers shall--
``(A) note a request for translation services in
the borrower's file and make such note available to all
relevant servicer personnel; and
``(B) note in the borrower's file any time the
borrower has communicated or sought to communicate with
the servicer in a language other than English, and
shall include such other language.
``(3) Translated documents.--
``(A) Providing documents.--
``(i) In general.--Servicers shall, if a
borrower asks for translated documents, provide
key documents to the borrower translated into
the language of the borrower, including
periodic statements, affordable loan
modification applications, denial notices, and
loan modification offers, including any trial
period plan.
``(ii) Exception.--Clause (i) shall only
require providing documents in--
``(I) commonly spoken languages in
the United States, as determined by the
Bureau;
``(II) with respect to a particular
servicer, languages spoken by a
significant number of individuals
living in any markets in which the
servicer does business, as determined
by the Bureau.
``(B) Accepting documents.--Servicers shall only be
required to accept documents in languages in which the
servicer already provides documents, that are
considered to be part of routine business transactions
in the market in which the mortgage loan was made, or
that are used in documents provided to the public by
any department or agency of the Federal Government.
``(4) Exception.--Subparagraph (A) of paragraph (3) shall
not apply to small servicers, as defined under section
1026.41(e)(4)(ii) of title 12, Code of Federal Regulations.
``(c) Requirements During Affordable Loan Modification Process.--
``(1) Borrowers facing imminent default.--Servicers shall
evaluate a borrower facing imminent default (as such term is
defined by the Bureau), as well as those in default, for
affordable loan modification assistance, as described in this
section.
``(2) Assistance to borrowers.--
``(A) Assistance in applying for affordable loan
modification.--Servicers shall--
``(i) have available and sufficient staff
to answer questions borrowers may have about
filling out documents; and
``(ii) provide borrowers a list of non-
profit legal services organizations and housing
agencies approved by the Department of Housing
and Urban Development, that can assist the
borrowers with documents.
``(B) Treatment of successors in interest.--
Servicers shall--
``(i) provide full information and complete
loss mitigation options to successor homeowners
protected from an acceleration of a mortgage
loan under the Garn-St Germain Depository
Institutions Act of 1982, if requested by the
successor homeowner; and
``(ii) review a mortgage loan for loss
mitigation, as though the successor homeowner
was the borrower, and provide a decision on
available loss mitigation prior to an
assumption of the mortgage loan, if requested
by the succeeding homeowner.
``(3) After reviewing application.--If a servicer denies an
application for an affordable loan modification, the servicer
shall notify the borrower of other loss mitigation options that
may be available to the borrower and shall consider the
borrower for such other loss mitigation options.
``(4) Rule of construction.--Nothing in this section shall
be construed as prohibiting a servicer from considering a
borrower for other loss mitigation options, so long as the
servicer first offers the borrower an affordable loan
modification if the borrower is eligible for such a
modification.
``(5) Requirements related to transfer of loans.--
``(A) In general.--For any transfer of servicing to
a successor servicer of a federally related mortgage
loan or subservicer, the transferring servicer shall--
``(i) inform the successor servicer
(including a subservicer) whether a loan
modification request is pending;
``(ii) provide the successor servicer with
all documentation related to the mortgage loan,
including any documentation relating to a loan
modification or loss mitigation process;
``(iii) ensure that the successor servicer
has the operational capacity to manage the
transferred loan;
``(iv) ensure that the successor servicer
shall accept and continue processing prior loan
modification requests, by including such
requirement in the agreement made between the
servicers when transferring the loan;
``(v) ensure that successor servicer shall
honor trial and permanent loan modification
agreements entered into by the transferring
servicer by including such requirement in the
agreement made between the servicers when
transferring the loan; and
``(vi) notify the borrower of the
transferred loan that the new servicer is
required to accept and continue processing
prior loan modification requests, if any, and
is required to honor trial and permanent loan
modification agreements entered into by the
transferring servicer, if any.
``(B) Honoring of existing loan modifications and
applications in process.--The successor servicer shall
agree to honor and accept any existing loan
modification and continue any loan modification
applications.
``(C) Prohibition on foreclosure.--During the 60-
day period beginning on the effective date of transfer
of the servicing of any federally related mortgage
loan, the mortgage loan subject to such transfer may
not be subject to initiation of a judicial or non-
judicial foreclosure or be subject to a foreclosure
sale.
``(d) Subsequent Applications for Affordable Loan Modification.--If
a borrower has submitted an application or request in the past, the
servicer shall allow such borrower to make a subsequent affordable loan
modification application if the borrower experiences a material change
in circumstances, as defined by the Bureau.
``(e) Limitation on Foreclosure Proceedings.--
``(1) Stop of sales pending application.--If a borrower
submits an initial application for affordable loan modification
assistance more than 7 business days before a scheduled
foreclosure sale, the servicer must stop and cancel the
foreclosure sale.
``(2) Initiation of foreclosure.--A servicer may not
initiate or continue a nonjudicial foreclosure or a judicial
foreclosure that is otherwise authorized under State law
against a mortgagor that has submitted an initial application
for an affordable loan modification or other loss mitigation,
unless the servicer--
``(A) has determined whether the mortgagor is
eligible for an affordable loan modification; and
``(B) has made such a modification, if the
mortgagor is eligible for a modification.
``(3) Foreclosure proceedings permitted.--Notwithstanding
paragraph (2), a servicer may initiate or continue a judicial
or nonjudicial foreclosure under State law against a borrower,
if--
``(A) the servicer--
``(i) determines that the borrower is not
eligible for a modification;
``(ii) notifies the borrower of the
determination under clause (i); and
``(iii) provides the borrower--
``(I) a copy of any net present
value calculation made by the servicer
in relation to an affordable loan
modification, including any information
providing a basis for such net present
value calculation;
``(II) a copy of any note, deed of
trust, or other document necessary to
establish the right of the servicer to
foreclose on the mortgage, including
proof of assignment of the mortgage to
the servicer and the right of the
servicer to enforce the relevant note
under the law of the State in which the
real property securing the mortgage is
located;
``(III) a copy of any language in
the pooling or servicing agreement with
respect to the mortgage that the
servicer relies upon in asserting that
it is prohibited or limited in
providing a modification of the
mortgage note;
``(IV) a copy of all correspondence
between the servicer and the borrowers
and investors in which the servicer
attempts to obtain permission to make a
modification; and
``(V) the alternatives to
foreclosure available to the borrower,
including deed in lieu of foreclosures
and short sales; or
``(B) a borrower--
``(i) declines to be considered for a loan
modification in writing or declines an
affordable modification in writing; or
``(ii) does not respond to the servicer's
outreach activities (as defined by the Bureau)
to obtain underlying information to complete an
application or fails to make a trial or
permanent loan modification payment.
For purposes of subparagraph (A), a `pooling and servicing
agreement' is any contract establishing the transaction rights
and duties of the parties to any mortgage-backed securitization
transaction.
``(4) Bar to foreclosure.--Failure to comply with the
requirements of this subsection shall be a bar to the
foreclosure of a mortgage, deed of trust, or substantially
similar instrument.
``(5) Fees.--
``(A) Waiver of late fees.--If a borrower's
application for affordable loan modification assistance
is accepted, the servicer shall waive any foreclosure
fees and any late fees related to the delinquency in
payment.
``(B) No fee accrual while application is
pending.--A borrower shall not accrue additional late
or foreclosure fees during the period beginning on the
date that the borrower submits an affordable loan
modification application and the date on which the
servicer makes a determination on such application.
``(6) Notification.--With respect to a foreclosure sale
that is postponed by reason of this subsection, the servicer
shall notify the borrower in writing of such postponement and,
if a date for such foreclosure sale is rescheduled, shall
notify the borrower in writing of the new foreclosure sale
date.
``(7) Certification of determination of eligibility
required for sale.--
``(A) Sale of property prohibited.--If the servicer
of a mortgage does not file a certification with the
appropriate land records office in the jurisdiction
where the property securing the mortgage is located,
stating that the servicer has determined the
eligibility of the mortgagor for an affordable loan
modification in compliance with this section--
``(i) the mortgagee may not sell the
property securing the mortgage; and
``(ii) no person that purchases the
property securing the mortgage may initiate an
action to recover possession of the property.
``(B) Violations.--A sale of property in violation
of this paragraph shall be void.
``(8) Initial application defined.--For purposes of this
subsection, the term `initial application' means a completed
Uniform Borrower Assistance Form 710 of the Federal National
Mortgage Association or the Federal Home Loan Mortgage
Corporation, a Request for Modification and Affidavit of the
Making Home Affordable Program, or other equivalent form that
sets forth the borrower's financial, income, and hardship
information and Form 4506-T of the Internal Revenue Service.
``(f) Affordable Loan Modifications.--
``(1) Affordable loan modification defined.--For purposes
of this section, the term `affordable loan modification' means
an agreement to reduce the amount of scheduled regular
payments, determined by the borrower's debt-to-income ratio or
residual income, and subject to such terms and conditions as
may be set by the Bureau, including any reduction of the
principal amount of the mortgage note as described in paragraph
(4), that is reflected in a permanent change to the terms of
the mortgage note under such terms as the Bureau shall define.
``(2) Calculation of target affordable regular mortgage
payment.--For purposes of this subsection, the target
affordable regular mortgage payment shall be an amount
determined by the borrower's debt-to-income ratio or residual
income, and subject to such terms and conditions as may be set
by the Bureau, subject to such terms and conditions as may be
set by the Bureau. Such terms shall be based on a fully
amortizing principal and interest payment over the remainder of
the term of the mortgage, as modified by any reduction in
principal.
``(3) Eligibility.--A mortgagor shall be eligible to
participate in an affordable loan modification if--
``(A) such person is a borrower under a federally
related loan secured by the principal residence of the
borrower or a person eligible to assume such a loan as
a successor homeowner protected from an acceleration of
a mortgage loan under the Garn-St Germain Depository
Institutions Act of 1982, who is unable to make
payments on a federally related mortgage loan under
such criteria as the Director of the Bureau shall
define, in consultation with the Secretary of Housing
and Urban Development and the Secretary of the
Treasury;
``(B) such residence is occupied by the mortgagor;
and
``(C) the loan modification has a positive net
present value (as defined under paragraph
(4)(B)(iv)(II)).
``(4) Earned principal forgiveness.--
``(A) In general.--If, after reducing mortgage note
principal under earned principal forgiveness provided
in subparagraph (B), a target affordable regular
mortgage payment has not been achieved, the servicer of
the mortgage shall comply with the affordable loan
modification plan waterfall steps as set out by the
Bureau of interest rate reduction, term extension, and
principal forbearance, as necessary to achieve a target
affordable regular mortgage payment.
``(B) Earned principal forgiveness.--
``(i) Principal reduction.--The Bureau
shall determine standards by which a mortgagor
who has received an affordable loan
modification shall remain in good standing in
order to participate in a reduction in mortgage
note principal under this subsection.
``(ii) Principal reduction required.--
Except as provided under clause (iii), a
servicer shall offer a borrower an affordable
loan modification having the maximum amount of
principal reduction that results in a positive
net present value calculation. For purposes of
calculating net present value, a servicer may
use their own formula, if it has been approved
by the Bureau, or may use a default formula
determined by the Bureau.
``(iii) Exceptions.--
``(I) Greater principal
reduction.--A servicer may offer a
greater principal reduction, if such a
reduction is consistent with the terms
of any contract with respect to the
mortgage.
``(II) Loan-to-value ratio.--A
servicer is not required to offer a
principal reduction that would result
in a loan-to-value ratio of less than
100 percent.
``(iv) Rules of construction.--
``(I) Maximum amount of principal
reduction.--A principal reduction
amount may be considered the maximum
amount if it is within $1,000 of the
actual maximum amount.
``(II) Positive net present value
calculation.--A net present value
calculation shall be deemed to be
`positive' for the mortgage investors
if the net present value result for an
affordable loan modification scenario
is greater than the net present value
result if no affordable loan
modification is made. Net present value
shall be calculated as the benefit of
all investors in a securitization
rather than the benefit of any
particular class of investors.
``(v) Principal forgiveness.--
``(I) Treatment of principal
reduction amount.--Any amount of
principal reduction under clause (ii)
shall be treated as non-interest-
bearing principal forbearance until the
dates described under subclause (II).
The principal reduction described in
this clause shall be deemed to be
separate from and exclusive of any
other forbearance that may be offered
in conjunction with a modification
under an affordable loan modification
program.
``(II) Reduction of principal.--The
servicer of a mortgage modified under
an affordable loan modification plan
shall reduce the unpaid balance of the
principal of the mortgage by an amount
equal to \1/3\ of the total amount of
the principal reduction under clause
(ii) on each of the following dates:
``(aa) The date that is 1
year after the date on which
the affordable loan
modification begins.
``(bb) The date that is 2
years after the date on which
the affordable loan medication
begins.
``(cc) The date that is 3
years after the date on which
the affordable loan
modification begins.
``(vi) Certain modifications.--With respect
to a borrower that is not underwater and does
not qualify for principle reduction, the
servicer shall offer such borrower an
affordable loan modification to reach the
target affordable regular mortgage payment
amount, if the borrower qualifies.
``(5) Treatment of junior liens.--With respect to a
borrower, if a primary mortgage loan is modified pursuant to
this subsection, the servicer of any junior mortgage loan shall
make a modification available to the borrower on the same terms
as the modification of the primary mortgage loan, unless
prohibited by contract.
``(6) Rule of construction.--Nothing in this section shall
be construed as prohibiting a servicer from providing a loan
modification that does not produce a positive net present value
(as defined under paragraph (4)(B)(iv)(II)).
``(g) Bar to Foreclosure.--In any judicial or non-judicial
foreclosure proceeding, it shall be a bar to foreclosure that the
servicer of the federally related mortgage loan on the property to be
foreclosed violated any provision of this section.
``(h) Civil Penalty.--
``(1) In general.--Any servicer who violates a provision of
this section shall be subject to a fine in an amount, as
determined by the Bureau, not to exceed $5,000 for each
violation except that the maximum penalty for all violations by
any particular servicer during any 1-year period shall not
exceed $1,000,000.
``(2) Liability to borrower.--Any servicer that violates a
provision of this section with respect to a loan shall be
liable to the borrower of such loan in the amount of $10,000
per violation.
``(3) Continuing violations.--In the case of a continuing
violation, as determined by the Bureau, each day shall
constitute a separate violation for purposes of this
subsection.
``(4) Adjustment of amounts.--After the end of the 1-year
period beginning on the date of the enactment of this
subsection, the Bureau shall annually adjust amounts specified
under this subsection to reflect inflation.
``SEC. 6B. MORTGAGE SERVICER OMBUDSMAN.
``(a) In General.--The Director of the Bureau shall appoint a
Mortgage Servicer Ombudsman (the `Ombudsman') within the Bureau.
``(b) Duties.--The Ombudsman shall provide assistance to servicers
and borrowers in complying with Federal law with respect to the
servicing of mortgage loans and offer resolution to borrowers who are
facing noncompliance.
``(c) Focus on Low-Income Borrowers.--In carrying out this section,
the Ombudsman shall focus on providing assistance to low-income
borrowers.
``(d) Consultation.--The Ombudsman shall consult with--
``(1) attorneys general of States in carrying out this
section; and
``(2) other offices of the Bureau that engage in dispute
resolution.
``(e) Non-Duplication.--The Ombudsman may not carry out any
activities that would be duplicative with activities of other Bureau
offices.
``SEC. 6C. PENALTIES FOR ROBO-SIGNING.
``Any servicer who records or files with a land records office or a
court more than one document with material deficiencies with respect to
a mortgage loan shall be subject to a fine of not more than $7,500 for
each such loan.''.
SEC. 3. EXTENSION OF THE PROTECTING TENANTS AT FORECLOSURE ACT OF 2009.
Section 704 of the Protecting Tenants at Foreclosure Act of 2009
(12 U.S.C. 5201 note; 12 U.S.C. 5220 note; 42 U.S.C. 1437f note) is
hereby repealed.
SEC. 4. RULE OF CONSTRUCTION.
Nothing in this Act, or the amendments made by this Act, shall be
construed as preempting any State or local law with respect to
foreclosures that provides greater protections for consumers.
SEC. 5. RULEMAKING.
The Bureau of Consumer Financial Protection shall, not later than
the end of the 12-month period beginning on the date of the enactment
of this Act, issue regulations to carry out this Act and the amendments
made by this Act, and the Bureau shall provide that such regulations
take effect not later than the end of the 6-month period beginning on
the date the regulations are issued.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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