,i #aacth ,,congress #ast ,session ,h4 ,r4 #aja ,,in ,,the ,,house ,,of ,,representatives ,january #c1 #bjac ,mr4 ,conyers 7for himself1 ,mr4 ,cohen1 ,mr4 ,nadler1 ,mr4 ,mc,dermott1 ,mr4 ,scott of ,virginia1 ,mr4 ,johnson of ,georgia1 and ,ms4 ,jackson ,lee7 introduced the following bill2 which was referred to the ,committee on the ,judiciary ,a ,,bill ,to amend title #aa of the ,united ,states ,code with respect to modification of certain mortgages on principal residences1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,home ,foreclosure ,reduction ,act of #bjac4 #b4 ,definition ,section #aja of title #aa1 ,united ,states ,code1 is amended by inserting after paragraph 7#dc7 the following 7and make such technical and conforming changes as may be appropriate73 7#dc;,a7 ,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 #d1 #bjji1 that-- 7,a7 reduces the debtor's payment 7including principal and interest1 and payments for real estate taxes1 hazard insurance1 mortgage insurance premium1 homeowners' association dues1 ground rent1 and special assessments7 on a loan secured by a senior security interest in the principal residence of the debtor1 to a percentage of the debtor's income in accordance with such guidelines1 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 loan2 7,b7 requires no fees or charges to be paid by the debtor in order to obtain such modification2 and 7,c7 permits the debtor to continue to make payments under the modification agreement notwithstanding the filing of a case under this title1 as if such case had not been filed4 4 #c4 ,eligibility for relief ,section #aji of title #aa1 ,united ,states ,code1 is amended-- 7#a7 by adding at the end of subsection 7e7 the following3 ,for purposes of this subsection1 the computation of debts shall not include the secured or unsecured portions of-- 7#a7 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 #ac is less than the applicable maximum amount of noncontingent1 liquidated1 secured debts specified in this subsection2 or 7#b7 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 #ac was less than the applicable maximum amount of noncontingent1 liquidated1 secured debts specified in this subsection4 1 and 7#b7 by adding at the end of subsection 7h7 the following3 7#e7 ,notwithstanding the #ahj-;day period specified in paragraph 7#a71 with respect to a debtor in a case under chapter #ac 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 residence1 the requirements of paragraph 7#a7 shall be considered to be satisfied if the debtor satisfies such requirements not later than the expiration of the #cj-;day period beginning on the date of the filing of the petition4 4 #d4 ,prohibiting claims arising from violations of the ,truth in ,lending ,act ,section #ejb7;b7 of title #aa1 ,united ,states ,code1 is amended-- 7#a7 in paragraph 7#h7 by striking or at the end1 7#b7 in paragraph 7#i7 by striking the period at the end and inserting 2 or1 and 7#c7 by adding at the end the following3 7#aj7 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 judgment1 except that nothing in this paragraph shall be construed to modify1 impair1 or supersede any other right of the debtor4 4 #e4 ,authority to modify certain mortgages ,section #acbb of title #aa1 ,united ,states ,code1 is amended-- 7#a7 in subsection 7b7-- 7,a7 by redesignating paragraph 7#aa7 as paragraph 7#ab71 7,b7 in paragraph 7#aj7 by striking and at the end1 and 7,c7 by inserting after paragraph 7#aj7 the following3 7#aa7 notwithstanding paragraph 7#b71 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 loan1 modify the rights of the holder of such claim 7and the rights of the holder of any claim secured by a subordinate security interest in such residence7-- 7,a7 by providing for payment of the amount of the allowed secured claim as determined under section #ejf7;a77#a72 7,b7 if any applicable rate of interest is adjustable under the terms of such loan by prohibiting1 reducing1 or delaying adjustments to such rate of interest applicable on and after the date of filing of the plan2 7,c7 by modifying the terms and conditions of such loan-- 7i7 to extend the repayment period for a period that is no longer than the longer of #dj years 7reduced by the period for which such loan has been outstanding7 or the remaining term of such loan1 beginning on the date of the order for relief under this chapter2 and 7ii7 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 chapter1 corresponding to the repayment term determined under the preceding paragraph1 as published by the ,federal ,financial ,institutions ,examination ,council in its table entitled ,average ,prime ,offer ,rates--,fixed1 plus a reasonable premium for risk2 and 7,d7 by providing for payments of such modified loan directly to the holder of the claim or1 at the discretion of the court1 through the trustee during the term of the plan2 and 1 and 7#b7 by adding at the end the following3 7g7 ,a claim may be reduced under subsection 7b77#aa77;,a7 only on the condition that if the debtor sells the principal residence securing such claim1 before completing all payments under the plan 7or1 if applicable1 before receiving a discharge under section #acbh7;b77 and receives net proceeds from the sale of such residence1 then the debtor agrees to pay to such holder not later than #ae days after receiving such proceeds-- 7#a7 if such residence is sold in the #ast year occurring after the effective date of the plan1 #ij percent of the amount of the difference between the sales price and the amount of such claim as originally determined under subsection 7b77#aa7 7plus costs of sale and improvements71 but not to exceed the unpaid amount of the allowed secured claim determined as if such claim had not been reduced under such subsection2 7#b7 if such residence is sold in the #b;d year occurring after the effective date of the plan1 #gj percent of the amount of the difference between the sales price and the amount of such claim as originally determined under subsection 7b77#aa7 7plus costs of sale and improvements71 but not to exceed the unpaid amount of the allowed secured claim determined as if such claim had not been reduced under such subsection2 7#c7 if such residence is sold in the #c;d year occurring after the effective date of the plan1 #ej percent of the amount of the difference between the sales price and the amount of such claim as originally determined under subsection 7b77#aa7 7plus costs of sale and improvements71 but not to exceed the unpaid amount of the allowed secured claim determined as if such claim had not been reduced under such subsection2 7#d7 if such residence is sold in the #dth year occurring after the effective date of the plan1 #cj percent of the amount of the difference between the sales price and the amount of such claim as originally determined under subsection 7b77#aa7 7plus costs of sale and improvements71 but not to exceed the unpaid amount of the allowed secured claim determined as if such claim had not been reduced under such subsection2 and 7#e7 if such residence is sold in the #eth year occurring after the effective date of the plan1 #aj percent of the amount of the difference between the sales price and the amount of such claim as originally determined under subsection 7b77#aa7 7plus costs of sale and improvements71 but not to exceed the unpaid amount of the allowed secured claim determined as if such claim had not been reduced under such subsection4 7h7 ,with respect to a claim of the kind described in subsection 7b77#aa71 the plan may not contain a modification under the authority of subsection 7b77#aa7-- 7#a7 in a case commenced under this chapter after the expiration of the #cj-;day period beginning on the effective date of this subsection1 unless-- 7,a7 the debtor certifies that the debtor-- 7i7 not less than #cj days before the commencement of the case1 contacted the holder of such claim 7or the entity collecting payments on behalf of such holder7 regarding modification of the loan that is the subject of such claim2 7ii7 provided the holder of the claim 7or the entity collecting payments on behalf of such holder7 a written statement of the debtor's current income1 expenses1 and debt substantially conforming with the schedules required under section #eba7;a7 or such other form as is promulgated by the ,judicial ,conference of the ,united ,states for such purpose2 and 7iii7 considered any qualified loan modification offered to the debtor by the holder of the claim 7or the entity collecting payments on behalf of such holder72 or 7,b7 a foreclosure sale is scheduled to occur on a date in the #cj-;day period beginning on the date of case is commenced2 and 7#b7 in any other case pending under this chapter1 unless the debtor certifies that the debtor attempted to contact the holder of such claim 7or the entity collecting payments on behalf of such holder7 regarding modification of the loan that is the subject of such claim1 before-- 7,a7 filing a plan under section #acba that contains a modification under the authority of subsection 7b77#aa72 or 7,b7 modifying a plan under section #acbc or #acbi to contain a modification under the authority of subsection 7b77#aa74 7i7 ,in determining the holder's allowed secured claim under section #ejf7;a77#a7 for purposes of subsection 7b77#aa77;,a71 the value of the debtor's principal residence shall be the fair market value of such residence on the date such value is determined and1 if the issue of value is contested1 the court shall determine such value in accordance with the appraisal rules used by the ,federal ,housing ,administration4 4 #f4 ,combating excessive fees ,section #acbb7;c7 of title #aa1 ,united ,states ,code1 is amended-- 7#a7 in paragraph 7#a7 by striking and at the end1 7#b7 in paragraph 7#b7 by striking the period at the end and inserting a semicolon1 and 7#c7 by adding at the end the following3 7#c7 the debtor1 the debtor's property1 and property of the estate are not liable for a fee1 cost1 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-- 7,a7 the holder of the claim for such debt files with the court and serves on the trustee1 the debtor1 and the debtor's attorney 7annually or1 in order to permit filing consistent with clause 7ii71 at such more frequent periodicity as the court determines necessary7 notice of such fee1 cost1 or charge before the earlier of-- 7i7 #a year after such fee1 cost1 or charge is incurred2 or 7ii7 #fj days before the closing of the case2 and 7,b7 such fee1 cost1 or charge-- 7i7 is lawful under applicable nonbankruptcy law1 reasonable1 and provided for in the applicable security agreement2 and 7ii7 is secured by property the value of which is greater than the amount of such claim1 including such fee1 cost1 or charge2 7#d7 the failure of a party to give notice described in paragraph 7#c7 shall be deemed a waiver of any claim for fees1 costs1 or charges described in paragraph 7#c7 for all purposes1 and any attempt to collect such fees1 costs1 or charges shall constitute a violation of section #ebd7;a77#b7 or1 if the violation occurs before the date of discharge1 of section #cfb7;a72 and 7#e7 a plan may provide for the waiver of any prepayment penalty on a claim secured by the debtor's principal residence4 4 #g4 ,confirmation of plan 7a7 ,section #acbe7;a7 of title #aa1 ,united ,states ,code1 is amended-- 7#a7 in the matter preceding paragraph 7#a7 strike subsection 7b7 and insert subsections 7b7 and 7d71 7#b7 in paragraph 7#e7-- 7,a7 by inserting except as otherwise provided in section #acbb7;b77#aa71 after 7#e71 and 7,b7 in subparagraph 7,b77iii77,i7 by inserting 7including payments of a claim modified under section #acbb7;b77#aa77 after payments the first place it appears1 7#c7 in paragraph 7#h7 by striking and at the end1 7#d7 in paragraph 7#i7 by striking the period at the end and inserting a semicolon1 and 7#e7 by inserting after paragraph 7#i7 the following3 7#aj7 notwithstanding subclause 7,i7 of paragraph 7#e77;,b77i71 whenever the plan modifies a claim in accordance with section #acbb7;b77#aa71 the holder of a claim whose rights are modified pursuant to section #acbb7;b77#aa7 shall retain the lien until the later of-- 7,a7 the payment of such holder's allowed secured claim2 or 7,b7 completion of all payments under the plan 7or1 if applicable1 receipt of a discharge under section #acbh7;b772 and 7#aa7 whenever the plan modifies a claim in accordance with section #acbb7;b77#aa71 the court finds that such modification is in good faith 7,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 future1 including the positive amortization of mortgage debt4 ,in determining whether a reduction of the principal amount of the loan resulting from a modification made under the authority of section #acbb7;b77#aa7 is made in good faith1 the court shall consider whether the holder of such claim 7or the entity collecting payments on behalf of such holder7 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 amount47 and does not find that the debtor has been convicted of obtaining by actual fraud the extension1 renewal1 or refinancing of credit that gives rise to a modified claim4 4 7b7 ,section #acbe of title #aa1 ,united ,states ,code1 is amended by adding at the end the following 7and make such technical and conforming changes as may be appropriate73 7d7 ,notwithstanding section #acbb7;b77#aa77;,c77ii71 the court1 on request of the debtor or the holder of a claim secured by a senior security interest in the debtor's principal residence1 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 principal1 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 #d1 #bjji1 if1 taking into account the debtor's financial situation1 after allowance of expenses that would be permitted for a debtor under this chapter subject to paragraph 7#c7 of subsection 7b71 regardless of whether the debtor is otherwise subject to such paragraph1 and taking into account additional debts and fees that are to be paid in this chapter and thereafter1 the debtor would be able to prevent foreclosure and pay a fully amortizing #cj-year loan at such reduced interest rate without such reduction in principal4 4 #h4 ,discharge ,section #acbh7;a7 of title #aa1 ,united ,states ,code1 is amended-- 7#a7 by inserting 7other than payments to holders of claims whose rights are modified under section #acbb7;b77#aa77 after paid1 and 7#b7 in paragraph 7#a7 by inserting or1 to the extent of the unpaid portion of an allowed secured claim1 provided for in section #acbb7;b77#aa7 after #acbb7;b77#e74 #i4 ,standing trustee fees 7a7 ,amendment to title #bh ,section #ehf7;e77#a77;,b77i7 of title #bh1 ,united ,states ,code1 is amended-- 7#a7 by inserting 7,i7 except as provided in subparagraph 7,,ii7 after 7i71 7#b7 by striking or at the end and inserting and1 and 7#c7 by adding at the end the following3 7,,ii7 #d percent with respect to payments received under section #acbb7;b77#aa7 of title #aa by the individual as a result of the operation of section #acbb7;b77#aa77;,d7 of title #aa1 unless the bankruptcy court waives all fees with respect to such payments based on a determination that such individual has income less than #aej percent of the income official poverty line 7as defined by the ,office of ,management and ,budget1 and revised annually in accordance with section #fgc7b7 of the ,omnibus ,budget ,reconciliation ,act of #aiha7 applicable to a family of the size involved and payment of such fees would render the debtor's plan infeasible4 4 7b7 ,conforming provision ,the amendments made by this section shall apply to any trustee to whom the provisions of section #cjb7;d77#c7 of the ,bankruptcy ,judges1 ,united ,states ,trustees1 and ,family ,farmer ,bankruptcy ,act of #aihf 7,public ,law #ii-eed2 #ajj ,stat4 #caba7 apply4 #aj4 ,effective date2 application of amendments 7a7 ,effective date ,except as provided in subsection 7b71 this subtitle and the amendments made by this subtitle shall take effect on the date of the enactment of this ,act4 7b7 ,application of amendments 7#a7 ,in general ,except as provided in paragraph 7#b71 the amendments made by this subtitle shall apply with respect to cases commenced under title #aa of the ,united ,states ,code before1 on1 or after the date of the enactment of this ,act4 7#b7 ,limitation ,paragraph 7#a7 shall not apply with respect to cases closed under title #aa of the ,united ,states ,code as of the date of the enactment of this ,act that are neither pending on appeal in1 nor appealable to1 any court of the ,united ,states4 #aa4 ,,gao study ,the ,comptroller ,general shall carry out a study1 and submit to the ,committee on the ,judiciary of the ,house of ,representatives and the ,committee on the ,judiciary of the ,senate1 not later than #b years after the date of the enactment of this ,act a report containing-- 7#a7 the results of such study of-- 7,a7 the number of debtors who filed1 during the #a-year period beginning on the date of the enactment of this ,act1 cases under chapter #ac of title #aa of the ,united ,states ,code for the purpose of restructuring their principal residence mortgages1 7,b7 the number of mortgages restructured under the amendments made by this subtitle that subsequently resulted in default and foreclosure1 7,c7 a comparison between the effectiveness of mortgages restructured under programs outside of bankruptcy1 such as ,hope ,now and ,help for ,homeowners1 and mortgages restructured under the amendments made by this subtitle1 7,d7 the number of cases presented to the bankruptcy courts where mortgages were restructured under the amendments made by this subtitle that were appealed1 7,e7 the number of cases presented to the bankruptcy courts where mortgages were restructured under the amendments made by the subtitle that were overturned on appeal1 and 7,f7 the number of bankruptcy judges disciplined as a result of actions taken to restructure mortgages under the amendments made by this subtitle1 and 7#b7 a recommendation as to whether such amendments should be amended to include a sunset clause4 #ab4 ,report to ,congress ,not later than #ah months after the date of the enactment of this ,act1 the ,comptroller ,general1 in consultation with the ,federal ,housing ,administration1 shall submit to the ,congress1 a report containing-- 7#a7 a comprehensive review of the effects of the amendments made by this subtitle on bankruptcy court1 7#b7 a survey of whether the program should limit the types of homeowners eligible for the program1 and 7#c7 a recommendation on whether such amendments should remain in effect4