,i #aaeth ,,congress #ast ,session ,h4 ,r4 #cjae ,,in ,,the ,,house ,,of ,,representatives ,june #bb1 #bjag,ms4 ,michelle ,lujan ,grisham of ,new ,mexico introduced the following bill2 which was referred to the ,committee on ,financial ,services ,a ,,bill ,to amend the ,real ,estate ,settlement ,procedures ,act of #aigd to provide protections to borrowers1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,national ,homeowners ,bill of ,rights ,act of #bjag4 #b4 ,servicer treatment of borrowers 7a7 ,in general ,section #f of the ,real ,estate ,settlement ,procedures ,act of #aigd 7#ab ,u4,s4,c4 #bfje7 is amended by adding at the end the following3 7n7 ,servicer treatment of borrowers 7#a7 ,servicer requirements 7,a7 ,single electronic record and single point of contact ,each servicer of a federally related mortgage loan1 or agents of such servicer1 shall1 with respect to the borrower1 establish a single electronic record for each account1 the contents of which shall be accessible throughout the servicer1 or agents of such servicer1 including to all affordable loan modification staff1 all foreclosure staff1 and all bankruptcy staff4 7,b7 ,availability of net present value information ,servicers shall maintain a free and publicly accessible website where borrowers may check their estimated net present value4 7#b7 ,protections for homeowners with limited ,english proficiency 7,a7 ,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 capacity4 ,the servicer shall ensure that the person providing the oral interpretation services has specific knowledge of loss mitigation and mortgage terms4 7,b7 ,notification of available assistance 7i7 ,in general ,servicers shall provide each borrower with a notice-- 7,i7 stating that the borrower may receive assistance in a language other than ,english2 and 7,,ii7 containing information on how to request such assistance4 7ii7 ,form of notice ,the ,bureau may issue regulations to provide for the form1 content1 and manner of service of the notice described under clause 7i74 7iii7 ,notice on transfer ,each transferee servicer to whom the servicing of any federally related mortgage loan is assigned1 sold1 or transferred shall include the notice required under this paragraph in the notice required under subsection 7c74 7,c7 ,notation in file ,servicers shall-- 7i7 note a request for translation services in the borrower's file and make such note available to all relevant servicer personnel2 and 7ii7 note in the borrower's file any time the borrower has communicated or sought to communicate with the servicer in a language other than ,english1 and shall include such other language4 7,d7 ,translated documents 7i7 ,providing documents 7,i7 ,in general ,servicers shall1 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 services1 provide key documents to the borrower translated into the language of the borrower1 including-- 7aa7 periodic statements2 7bb7 affordable loan modification applications1 including hardship affidavits2 7cc7 denial notices2 7dd7 loan modification offers1 including any trial period plan2 and 7ee7 such other documents as the ,bureau may determine appropriate4 7,,ii7 ,exception ,subclause 7,i7 shall only require providing documents in-- 7aa7 commonly spoken languages in the ,united ,states1 as determined by the ,bureau2 and 7bb7 with respect to a particular servicer1 languages spoken by a significant number of individuals living in any markets in which the servicer does business1 as determined by the ,bureau4 7,,iii7 ,bureau consideration of census data ,in making determinations under this clause1 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 well4 7ii7 ,accepting documents ,servicers shall only be required to accept documents in languages in which the servicer already provides documents1 that are considered to be part of routine business transactions in the market in which the mortgage loan was made1 or that are used in documents provided to the public by any department or agency of the ,federal ,government4 7iii7 ,exception ,clause 7i7 shall not apply to small servicers1 as defined under section #ajbf4da7;e77#d77;ii7 of title #ab1 ,code of ,federal ,regulations4 7iv7 ,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 ,states1 and make such glossary available to servicers and the public4 7,e7 ,continuing requirement ,once a servicer has begun to communicate with a borrower in a particular language1 the servicer shall continue to communicate with the borrower in that language unless otherwise requested by the borrower4 7#c7 ,requirements during affordable loan modification process 7,a7 ,borrowers facing imminent default ,servicers shall evaluate a borrower facing imminent default 7as such term is defined by the ,bureau71 as well as those in default1 for affordable loan modification assistance1 as described in this subsection4 7,b7 ,assistance to borrowers 7i7 ,assistance in applying for affordable loan modification ,servicers shall-- 7,i7 have available and sufficient staff to answer questions borrowers may have about filling out documents2 and 7,,ii7 provide borrowers a list of nonprofit legal services organizations and housing agencies approved by the ,department of ,housing and ,urban ,development1 that can assist the borrowers with documents4 7ii7 ,treatment of successors in interest ,servicers shall-- 7,i7 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 #aihb1 if requested by the successor homeowner2 and 7,,ii7 review a mortgage loan for loss mitigation1 as though the successor homeowner was the borrower1 and provide a decision on available loss mitigation prior to an assumption of the mortgage loan1 if requested by the succeeding homeowner4 7,c7 ,simultaneous review for all loss mitigation options ,a servicer shall simultaneously evaluate a borrower for all available loss mitigation options1 including an affordable loan modification4 7,d7 ,rule of construction ,nothing in this subsection shall be construed as prohibiting a servicer from considering a borrower for other loss mitigation options1 so long as the servicer first offers the borrower an affordable loan modification if the borrower is eligible for such a modification4 7,e7 ,requirements related to transfer of loans 7i7 ,in general ,for any transfer of servicing to a successor servicer of a federally related mortgage loan or subservicer1 the transferring servicer shall-- 7,i7 inform the successor servicer 7including a subservicer7 whether a loan modification request is pending2 7,,ii7 provide the successor servicer with all documentation related to the mortgage loan1 including any documentation relating to a loan modification or loss mitigation process2 7,,iii7 ensure that the successor servicer has the operational capacity to manage the transferred loan2 7,,iv7 ensure that the successor servicer shall accept and continue processing prior loan modification requests1 by including such requirement in the agreement made between the servicers when transferring the loan2 7,v7 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 loan2 and 7,,vi7 notify the borrower of the transferred loan that the new servicer is required to accept and continue processing prior loan modification requests1 if any1 and is required to honor trial and permanent loan modification agreements entered into by the transferring servicer1 if any4 7ii7 ,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 applications4 7iii7 ,prohibition on foreclosure ,during the #fj-;day period beginning on the effective date of transfer of the servicing of any federally related mortgage loan1 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 sale4 7#d7 ,subsequent applications for affordable loan modification ,if a borrower has submitted an application or request in the past1 the servicer shall allow such borrower to make a subsequent affordable loan modification application if the borrower experiences a material change in circumstances1 as defined by the ,bureau4 7#e7 ,limitation on foreclosure proceedings 7,a7 ,halt to foreclosure and cancellation of scheduled sale pending application 7i7 ,in general ,if a borrower submits an initial application for affordable loan modification assistance more than #g business days before a scheduled foreclosure sale1 the servicer must stop and cancel the foreclosure sale and may not continue a nonjudicial foreclosure or a judicial foreclosure against the mortgagor4 7ii7 ,treatment if no foreclosure has been initiated ,for purposes of clause 7i71 if no foreclosure has been initiated at the time of a mortgagor's initial application for affordable loan modification assistance1 then an initial application is deemed to have been submitted more than #g business days before a scheduled foreclosure sale4 7iii7 ,treatment if a foreclosure has been initiated but no sale scheduled ,for purposes of clause 7i71 if a foreclosure has been initiated at the time of the mortgagor's initial application for affordable loan modification assistance1 but a foreclosure sale has not been scheduled1 then an initial application is deemed to have been submitted more than #g business days before a scheduled foreclosure sale4 7,b7 ,foreclosure proceedings permitted ,notwithstanding subparagraph 7,a71 a servicer may initiate or continue a judicial or nonjudicial foreclosure under ,state law against a borrower1 if-- 7i7 the servicer-- 7,i7 determines that the borrower is not eligible for a modification2 7,,ii7 notifies the borrower of the determination under subclause 7,i72 and 7,,iii7 provides the borrower-- 7aa7 a copy of any net present value calculation made by the servicer in relation to an affordable loan modification1 including any information providing a basis for such net present value calculation2 7bb7 a copy of any note1 deed of trust1 or other document necessary to establish the right of the servicer to foreclose on the mortgage1 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 located2 7cc7 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 note2 7dd7 a copy of all correspondence between the servicer and the borrowers and investors in which the servicer attempts to obtain permission to make a modification2 and 7ee7 the alternatives to foreclosure available to the borrower1 including deed in lieu of foreclosures and short sales2 or 7ii7 a borrower-- 7,i7 declines to be considered for a loan modification in writing or declines an affordable modification in writing2 or 7,,ii7 does not respond to the servicer's outreach activities 7as defined by the ,bureau7 to obtain underlying information to complete an application or fails to make a trial or permanent loan modification payment4 ,for purposes of clause 7i71 a pooling and servicing agreement is any contract establishing the transaction rights and duties of the parties to any mortgage-backed securitization transaction4 7,c7 ,bar to foreclosure ,failure to comply with the requirements of this paragraph shall be a bar to the foreclosure of a mortgage1 deed of trust1 or substantially similar instrument4 7,d7 ,fees 7i7 ,waiver of late fees ,if a borrower's application for affordable loan modification assistance is accepted1 the servicer shall waive any foreclosure fees and any late fees related to the delinquency in payment4 7ii7 ,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 application4 7,e7 ,notification ,with respect to a foreclosure sale that is postponed by reason of this subsection1 the servicer shall notify the borrower in writing of such postponement and1 if a date for such foreclosure sale is rescheduled1 shall notify the borrower in writing of the new foreclosure sale date4 7,f7 ,certification of determination of eligibility required for sale 7i7 ,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 located1 stating that the servicer has determined the eligibility of the mortgagor for an affordable loan modification in compliance with this subsection-- 7,i7 the mortgagee may not sell the property securing the mortgage2 and 7,,ii7 no person that purchases the property securing the mortgage may initiate an action to recover possession of the property4 7ii7 ,violations ,a sale of property in violation of this subparagraph shall be void4 7,g7 ,initial application defined ,for purposes of this paragraph1 the term initial application means a completed ,uniform ,borrower ,assistance ,form #gaj of the ,federal ,national ,mortgage ,association or the ,federal ,home ,loan ,mortgage ,corporation1 a ,request for ,modification and ,affidavit of the ,making ,home ,affordable ,program1 or other equivalent form that sets forth the borrower's financial1 income1 and hardship information and ,form #dejf-,t of the ,internal ,revenue ,service4 7#f7 ,affordable loan modifications 7,a7 ,affordable loan modification defined ,for purposes of this subsection1 the term affordable loan modification means an agreement to reduce the amount of scheduled regular payments1 determined by the borrower's debt-to-income ratio or residual income1 and subject to such terms and conditions as may be set by the ,bureau1 including any reduction of the principal amount of the mortgage note as described in paragraph 7#d71 that is reflected in a permanent change to the terms of the mortgage note under such terms as the ,bureau shall define4 7,b7 ,calculation of target affordable regular mortgage payment ,for purposes of this paragraph1 the target affordable regular mortgage payment shall be an amount determined by the borrower's debt-to-income ratio or residual income1 and subject to such terms and conditions as may be set by the ,bureau1 subject to such terms and conditions as may be set by the ,bureau4 ,such terms shall be based on a fully amortizing principal and interest payment over the remainder of the term of the mortgage1 as modified by any reduction in principal4 7,c7 ,eligibility ,a mortgagor shall be eligible to participate in an affordable loan modification if-- 7i7 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 #aihb1 who is unable to make payments on a federally related mortgage loan under such criteria as the ,director of the ,bureau shall define1 in consultation with the ,secretary of ,housing and ,urban ,development and the ,secretary of the ,treasury2 7ii7 such residence is occupied by the mortgagor2 and 7iii7 the loan modification has a positive net present value 7as defined under subparagraph 7,d77ii77,,iv77bb774 7,d7 ,earned principal forgiveness 7i7 ,in general ,if1 after reducing mortgage note principal under earned principal forgiveness provided in clause 7ii71 a target affordable regular mortgage payment has not been achieved1 the servicer of the mortgage shall comply with the affordable loan modification plan waterfall steps as set out by the ,bureau of interest rate reduction1 term extension1 and principal forbearance1 as necessary to achieve a target affordable regular mortgage payment4 7ii7 ,earned principal forgiveness 7,i7 ,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 paragraph4 7,,ii7 ,principal reduction required ,except as provided under subclause 7,,iii71 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 calculation4 ,for purposes of calculating net present value1 a servicer may use their own formula1 if it has been approved by the ,bureau1 or may use a default formula determined by the ,bureau4 7,,iii7 ,exceptions 7aa7 ,greater principal reduction ,a servicer may offer a greater principal reduction1 if such a reduction is consistent with the terms of any contract with respect to the mortgage4 7bb7 ,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 #ajj percent4 7,,iv7 ,rules of construction 7aa7 ,maximum amount of principal reduction ,a principal reduction amount may be considered the maximum amount if it is within #a1jjj of the actual maximum amount4 7bb7 ,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 made4 ,net present value shall be calculated as the benefit of all investors in a securitization rather than the benefit of any particular class of investors4 7,v7 ,principal forgiveness 7aa7 ,treatment of principal reduction amount ,any amount of principal reduction under subclause 7,,ii7 shall be treated as noninterest-bearing principal forbearance until the dates described under item 7bb74 ,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 program4 7bb7 ,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 #ac of the total amount of the principal reduction under subclause 7,,ii7 on each of the following dates3 7,,aa7 ,the date that is #a year after the date on which the affordable loan modification begins4 7,,bb7 ,the date that is #b years after the date on which the affordable loan medication begins4 7,,cc7 ,the date that is #c years after the date on which the affordable loan modification begins4 7,,vi7 ,certain modifications ,with respect to a borrower that is not underwater and does not qualify for principle reduction1 the servicer shall offer such borrower an affordable loan modification to reach the target affordable regular mortgage payment amount1 if the borrower qualifies4 7,e7 ,treatment of junior liens ,with respect to a borrower1 if a primary mortgage loan is modified pursuant to this paragraph1 the servicer of any junior mortgage loan shall offer to modify or extinguish the second lien according to requirements established by the ,bureau4 7,f7 ,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 7as defined under subparagraph 7,d77ii77,,iv77bb774 7#g7 ,bar to foreclosure ,in any judicial or nonjudicial foreclosure proceeding1 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 subsection4 7o7 ,mortgage ,servicer ,ombudsman 7#a7 ,in general ,the ,director of the ,bureau shall appoint a ,mortgage ,servicer ,ombudsman 7the ,ombudsman7 within the ,bureau4 7#b7 ,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 noncompliance4 7#c7 ,focus on low-,income borrowers ,in carrying out this subsection1 the ,ombudsman shall focus on providing assistance to low-income borrowers4 7#d7 ,consultation ,the ,ombudsman shall consult with-- 7,a7 attorneys general of ,states in carrying out this section2 and 7,b7 other offices of the ,bureau that engage in dispute resolution4 7#e7 ,nonduplication ,the ,ombudsman may not carry out any activities that would be duplicative with activities of other ,bureau offices4 7p7 ,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 #g1ejj for each such loan4 4 7b7 ,damages and costs ,section #f7;f7 of the ,real ,estate ,settlement ,procedures ,act of #aigd 7#ab ,u4,s4,c4 #bfje7;f77 is amended by striking a pattern or practice of each place such term appears4 #c4 ,preferred language of consumer ,section #abi;,b of the ,truth in ,lending ,act 7#ae ,u4,s4,c4 #afci;b7 is amended by adding at the end the following3 7g7 ,preferred language of consumer 7#a7 ,application question ,in any application used by a mortgage originator for a residential mortgage loan1 the originator shall ask the consumer to state the consumer's preferred language4 7#b7 ,letters of explanation for origination ,a mortgage originator for a residential mortgage loan shall-- 7,a7 accept letters of explanation for origination in the consumer's preferred language2 and 7,b7 include any such letters in the consumer's file4 7#c7 ,sharing of information ,any time a mortgage originator assigns a residential mortgage loan or contracts with a servicer with respect to a residential mortgage loan1 the originator shall inform the assignee or servicer of the consumer's preferred language reported under paragraph 7#a7 and provide the assignee or servicer with any letters of explanation for origination described under paragraph 7#b74 4 #d4 ,protecting tenants at foreclosure 7a7 ,effect of foreclosure on preexisting tenancy 7#a7 ,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 section1 any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to-- 7,a7 the provision1 by such successor in interest of a notice to vacate to any bona fide tenant at least #ij days before the effective date of such notice2 and 7,b7 the rights of any bona fide tenant1 as of the date of such notice of foreclosure-- 7i7 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 lease1 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 residence1 subject to the receipt by the tenant of the #ij-;day notice under subparagraph 7,a72 or 7ii7 without a lease or with a lease terminable at will under ,state law1 subject to the receipt by the tenant of the #ij-;day notice under subparagraph 7,a71 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 tenants4 7#b7 ,bona ,fide ,lease or ,tenancy ,for purposes of this subsection1 a lease or tenancy shall be considered bona fide only if-- 7,a7 the mortgagor or the child1 spouse1 or parent of the mortgagor under the contract is not the tenant2 7,b7 the lease or tenancy was the result of an arms-length transaction2 and 7,c7 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 ,federal1 ,state1 or local subsidy4 7#c7 ,definition ,for purposes of this subsection1 the term federally-related mortgage loan has the same meaning as in section #c of the ,real ,estate ,settlement ,procedures ,act of #aigd 7#ab ,u4,s4,c4 #bfjb74 7b7 ,effect of foreclosure on section #h tenancies ,section #h7o77#g7 of the ,united ,states ,housing ,act of #aicg 7#db ,u4,s4,c4 #adcg;f7o77#g77 is amended-- 7#a7 by inserting before the semicolon in subparagraph 7,c7 the following3 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 cause1 except that the owner may terminate the tenancy effective on the date of transfer of the unit to the owner if the owner-- 7i7 will occupy the unit as a primary residence2 and 7ii7 has provided the tenant a notice to vacate at least #ij days before the effective date of such notice4 2 and 7#b7 by inserting at the end of subparagraph 7,f7 the following3 ,in the case of any foreclosure on any federally-related mortgage loan 7as that term is defined in section #c of the ,real ,estate ,settlement ,procedures ,act of #aigd 7#ab ,u4,s4,c4 #bfjb77 or on any residential real property in which a recipient of assistance under this subsection resides1 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 unit1 except that this provision and the provisions related to foreclosure in subparagraph 7,c7 shall not shall not affect any ,state or local law that provides longer time periods or other additional protections for tenants44 7c7 ,rulemaking ,the ,secretary of ,housing and ,urban ,development shall1 not later than the end of the #ab-month period beginning on the date of the enactment of this ,act1 issue regulations to carry out this section and the amendments made by this section1 and the ,secretary shall provide that such regulations take effect not later than the end of the #f-month period beginning on the date the regulations are issued4 #e4 ,rule of ,construction ,nothing in this ,act1 or the amendments made by this ,act1 shall be construed as preempting any ,state or local law with respect to foreclosures that provides greater protections for consumers4 #f4 ,rulemaking ,except with respect to section #d1 the ,bureau of ,consumer ,financial ,protection shall1 not later than the end of the #ab-month period beginning on the date of the enactment of this ,act1 issue regulations to carry out this ,act and the amendments made by this ,act1 and the ,bureau shall provide that such regulations take effect not later than the end of the #f-month period beginning on the date the regulations are issued4