National Homeowners Bill of Rights Act of 2017
This bill requires servicers of federally related mortgage loans to (1) establish for each borrower's account a single electronic record accessible throughout the servicer and available to all relevant staff; (2) maintain a website where borrowers may check their estimated net present value; and (3) provide free interpretation services to borrowers.
The bill also (1) establishes a loan-modification process to reduce the payments of eligible borrowers, (2) directs the Consumer Financial Protection Bureau to appoint a Mortgage Servicer Ombudsman, and (3) establishes certain limits on foreclosure sales.
[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3015 Introduced in House (IH)]
<DOC>
115th CONGRESS
1st Session
H. R. 3015
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 22, 2017
Ms. Michelle Lujan Grisham of New Mexico 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 2017''.
SEC. 2. SERVICER TREATMENT OF BORROWERS.
(a) In General.--Section 6 of the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2605) is amended by adding at the end the
following:
``(n) Servicer Treatment of Borrowers.--
``(1) Servicer requirements.--
``(A) 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.
``(B) Availability of net present value
information.--Servicers shall maintain a free and
publicly accessible website where borrowers may check
their estimated net present value.
``(2) Protections for homeowners with limited english
proficiency.--
``(A) Free oral interpretation.--Servicers shall
provide free oral interpretation services for borrowers
whose files include a notation of a preferred language
other than English or 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. The servicer shall
ensure that the person providing the oral
interpretation services has specific knowledge of loss
mitigation and mortgage terms.
``(B) Notification of available assistance.--
``(i) In general.--Servicers shall provide
each borrower with a notice--
``(I) stating that the borrower may
receive assistance in a language other
than English; and
``(II) containing information on
how to request such assistance.
``(ii) Form of notice.--The Bureau may
issue regulations to provide for the form,
content, and manner of service of the notice
described under clause (i).
``(iii) Notice on transfer.--Each
transferee servicer to whom the servicing of
any federally related mortgage loan is
assigned, sold, or transferred shall include
the notice required under this paragraph in the
notice required under subsection (c).
``(C) Notation in file.--Servicers shall--
``(i) note a request for translation
services in the borrower's file and make such
note available to all relevant servicer
personnel; and
``(ii) 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.
``(D) Translated documents.--
``(i) Providing documents.--
``(I) In general.--Servicers shall,
if a borrower asks for translated
documents or if the borrower's file
contains a notation that the borrower
has a language preference other than
English or if the borrower has already
requested oral interpretation services,
provide key documents to the borrower
translated into the language of the
borrower, including--
``(aa) periodic statements;
``(bb) affordable loan
modification applications,
including hardship affidavits;
``(cc) denial notices;
``(dd) loan modification
offers, including any trial
period plan; and
``(ee) such other documents
as the Bureau may determine
appropriate.
``(II) Exception.--Subclause (I)
shall only require providing documents
in--
``(aa) commonly spoken
languages in the United States,
as determined by the Bureau;
and
``(bb) 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.
``(III) Bureau consideration of
census data.--In making determinations
under this clause, the Bureau shall
take into consideration data from the
Bureau of the Census on percentages of
individuals who reported they speak
English less than `very well'.
``(ii) 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.
``(iii) Exception.--Clause (i) shall not
apply to small servicers, as defined under
section 1026.41(e)(4)(ii) of title 12, Code of
Federal Regulations.
``(iv) Development of glossary of terms.--
The Bureau shall develop a glossary of mortgage
loan and loss mitigation terms in each commonly
spoken language in the United States, and make
such glossary available to servicers and the
public.
``(E) Continuing requirement.--Once a servicer has
begun to communicate with a borrower in a particular
language, the servicer shall continue to communicate
with the borrower in that language unless otherwise
requested by the borrower.
``(3) Requirements during affordable loan modification
process.--
``(A) 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 subsection.
``(B) Assistance to borrowers.--
``(i) 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
nonprofit legal services organizations
and housing agencies approved by the
Department of Housing and Urban
Development, that can assist the
borrowers with documents.
``(ii) 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.
``(C) Simultaneous review for all loss mitigation
options.--A servicer shall simultaneously evaluate a
borrower for all available loss mitigation options,
including an affordable loan modification.
``(D) Rule of construction.--Nothing in this
subsection 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.
``(E) Requirements related to transfer of loans.--
``(i) 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.
``(ii) 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.
``(iii) 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
nonjudicial foreclosure or be subject to a
foreclosure sale.
``(4) 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.
``(5) Limitation on foreclosure proceedings.--
``(A) Halt to foreclosure and cancellation of
scheduled sale pending application.--
``(i) In general.--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 and may not continue a nonjudicial
foreclosure or a judicial foreclosure against
the mortgagor.
``(ii) Treatment if no foreclosure has been
initiated.--For purposes of clause (i), if no
foreclosure has been initiated at the time of a
mortgagor's initial application for affordable
loan modification assistance, then an initial
application is deemed to have been submitted
more than 7 business days before a scheduled
foreclosure sale.
``(iii) Treatment if a foreclosure has been
initiated but no sale scheduled.--For purposes
of clause (i), if a foreclosure has been
initiated at the time of the mortgagor's
initial application for affordable loan
modification assistance, but a foreclosure sale
has not been scheduled, then an initial
application is deemed to have been submitted
more than 7 business days before a scheduled
foreclosure sale.
``(B) Foreclosure proceedings permitted.--
Notwithstanding subparagraph (A), a servicer may
initiate or continue a judicial or nonjudicial
foreclosure under State law against a borrower, if--
``(i) the servicer--
``(I) determines that the borrower
is not eligible for a modification;
``(II) notifies the borrower of the
determination under subclause (I); and
``(III) provides the borrower--
``(aa) 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;
``(bb) 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;
``(cc) 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;
``(dd) 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
``(ee) the alternatives to
foreclosure available to the
borrower, including deed in
lieu of foreclosures and short
sales; or
``(ii) 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 clause (i), a `pooling and servicing
agreement' is any contract establishing the transaction
rights and duties of the parties to any mortgage-backed
securitization transaction.
``(C) Bar to foreclosure.--Failure to comply with
the requirements of this paragraph shall be a bar to
the foreclosure of a mortgage, deed of trust, or
substantially similar instrument.
``(D) Fees.--
``(i) 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.
``(ii) 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.
``(E) 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.
``(F) Certification of determination of eligibility
required for sale.--
``(i) 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
subsection--
``(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.
``(ii) Violations.--A sale of property in
violation of this subparagraph shall be void.
``(G) Initial application defined.--For purposes of
this paragraph, 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.
``(6) Affordable loan modifications.--
``(A) Affordable loan modification defined.--For
purposes of this subsection, 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.
``(B) Calculation of target affordable regular
mortgage payment.--For purposes of this paragraph, 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.
``(C) Eligibility.--A mortgagor shall be eligible
to participate in an affordable loan modification if--
``(i) 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;
``(ii) such residence is occupied by the
mortgagor; and
``(iii) the loan modification has a
positive net present value (as defined under
subparagraph (D)(ii)(IV)(bb)).
``(D) Earned principal forgiveness.--
``(i) In general.--If, after reducing
mortgage note principal under earned principal
forgiveness provided in clause (ii), 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.
``(ii) 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 paragraph.
``(II) Principal reduction
required.--Except as provided under
subclause (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.--
``(aa) 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.
``(bb) 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.--
``(aa) 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.
``(bb) 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.--
``(aa) Treatment of
principal reduction amount.--
Any amount of principal
reduction under subclause (II)
shall be treated as
noninterest-bearing principal
forbearance until the dates
described under item (bb). 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.
``(bb) 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
subclause (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.
``(E) Treatment of junior liens.--With respect to a
borrower, if a primary mortgage loan is modified
pursuant to this paragraph, the servicer of any junior
mortgage loan shall offer to modify or extinguish the
second lien according to requirements established by
the Bureau.
``(F) Rule of construction.--Nothing in this
subsection shall be construed as prohibiting a servicer
from providing a loan modification that does not
produce a positive net present value (as defined under
subparagraph (D)(ii)(IV)(bb)).
``(7) Bar to foreclosure.--In any judicial or nonjudicial
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
subsection.
``(o) Mortgage Servicer Ombudsman.--
``(1) In general.--The Director of the Bureau shall appoint
a Mortgage Servicer Ombudsman (the `Ombudsman') within the
Bureau.
``(2) 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.
``(3) Focus on low-income borrowers.--In carrying out this
subsection, the Ombudsman shall focus on providing assistance
to low-income borrowers.
``(4) Consultation.--The Ombudsman shall consult with--
``(A) attorneys general of States in carrying out
this section; and
``(B) other offices of the Bureau that engage in
dispute resolution.
``(5) Nonduplication.--The Ombudsman may not carry out any
activities that would be duplicative with activities of other
Bureau offices.
``(p) 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.''.
(b) Damages and Costs.--Section 6(f) of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2605(f)) is amended by striking ``a
pattern or practice of'' each place such term appears.
SEC. 3. PREFERRED LANGUAGE OF CONSUMER.
Section 129B of the Truth in Lending Act (15 U.S.C. 1639b) is
amended by adding at the end the following:
``(g) Preferred Language of Consumer.--
``(1) Application question.--In any application used by a
mortgage originator for a residential mortgage loan, the
originator shall ask the consumer to state the consumer's
preferred language.
``(2) Letters of explanation for origination.--A mortgage
originator for a residential mortgage loan shall--
``(A) accept letters of explanation for origination
in the consumer's preferred language; and
``(B) include any such letters in the consumer's
file.
``(3) Sharing of information.--Any time a mortgage
originator assigns a residential mortgage loan or contracts
with a servicer with respect to a residential mortgage loan,
the originator shall inform the assignee or servicer of the
consumer's preferred language reported under paragraph (1) and
provide the assignee or servicer with any letters of
explanation for origination described under paragraph (2).''.
SEC. 4. PROTECTING TENANTS AT FORECLOSURE.
(a) Effect of Foreclosure on Preexisting Tenancy.--
(1) In general.--In the case of any foreclosure on a
federally-related mortgage loan or on any dwelling or
residential real property after the date of enactment of this
section, any immediate successor in interest in such property
pursuant to the foreclosure shall assume such interest subject
to--
(A) the provision, by such successor in interest of
a notice to vacate to any bona fide tenant at least 90
days before the effective date of such notice; and
(B) the rights of any bona fide tenant, as of the
date of such notice of foreclosure--
(i) under any bona fide lease entered into
before the notice of foreclosure to occupy the
premises until the end of the remaining term of
the lease, except that a successor in interest
may terminate a lease effective on the date of
sale of the unit to a purchaser who will occupy
the unit as a primary residence, subject to the
receipt by the tenant of the 90-day notice
under subparagraph (A); or
(ii) without a lease or with a lease
terminable at will under State law, subject to
the receipt by the tenant of the 90-day notice
under subparagraph (A), except that nothing
under this subsection shall affect the
requirements for termination of any Federal- or
State-subsidized tenancy or of any State or
local law that provides longer time periods or
other additional protections for tenants.
(2) Bona fide lease or tenancy.--For purposes of this
subsection, a lease or tenancy shall be considered bona fide
only if--
(A) the mortgagor or the child, spouse, or parent
of the mortgagor under the contract is not the tenant;
(B) the lease or tenancy was the result of an arms-
length transaction; and
(C) the lease or tenancy requires the receipt of
rent that is not substantially less than fair market
rent for the property or the unit's rent is reduced or
subsidized due to a Federal, State, or local subsidy.
(3) Definition.--For purposes of this subsection, the term
``federally-related mortgage loan'' has the same meaning as in
section 3 of the Real Estate Settlement Procedures Act of 1974
(12 U.S.C. 2602).
(b) Effect of Foreclosure on Section 8 Tenancies.--Section 8(o)(7)
of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)(7)) is
amended--
(1) by inserting before the semicolon in subparagraph (C)
the following: ``and in the case of an owner who is an
immediate successor in interest pursuant to foreclosure during
the term of the lease vacating the property prior to sale shall
not constitute other good cause, except that the owner may
terminate the tenancy effective on the date of transfer of the
unit to the owner if the owner--
``(i) will occupy the unit as a primary
residence; and
``(ii) has provided the tenant a notice to
vacate at least 90 days before the effective
date of such notice.''; and
(2) by inserting at the end of subparagraph (F) the
following: ``In the case of any foreclosure on any federally-
related mortgage loan (as that term is defined in section 3 of
the Real Estate Settlement Procedures Act of 1974 (12 U.S.C.
2602)) or on any residential real property in which a recipient
of assistance under this subsection resides, the immediate
successor in interest in such property pursuant to the
foreclosure shall assume such interest subject to the lease
between the prior owner and the tenant and to the housing
assistance payments contract between the prior owner and the
public housing agency for the occupied unit, except that this
provision and the provisions related to foreclosure in
subparagraph (C) shall not shall not affect any State or local
law that provides longer time periods or other additional
protections for tenants.''.
(c) Rulemaking.--The Secretary of Housing and Urban Development
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
section and the amendments made by this section, and the Secretary
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.
SEC. 5. 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. 6. RULEMAKING.
Except with respect to section 4, 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
Sponsor introductory remarks on measure. (CR H5096)
Referred to the House Committee on Financial Services.
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