[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 378 Introduced in House (IH)]






109th CONGRESS
  1st Session
                                H. R. 378

 To establish a program to assist homeowners experiencing unavoidable, 
  temporary difficulty making payments on mortgages insured under the 
                         National Housing Act.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 26, 2005

  Mr. Fattah introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
 To establish a program to assist homeowners experiencing unavoidable, 
  temporary difficulty making payments on mortgages insured under the 
                         National Housing Act.

    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 ``Homeowners' Emergency Mortgage 
Assistance Act''.

SEC. 2. MORTGAGE EMERGENCY ASSISTANCE PROGRAM.

    (a) In General.--The Secretary shall establish a program to make 
payments on a mortgage insured under the National Housing Act for a 1- 
to 4-family residence when--
            (1) the mortgagee has given the mortgagor notice in 
        accordance with section 3(b) that it intends to foreclose the 
        mortgage;
            (2) at least 2 full monthly installments due on the 
        mortgage are unpaid after the application of any partial 
        payments that may have been accepted but not yet applied to the 
        mortgage account;
            (3) the mortgagor is suffering financial hardship due to 
        circumstances beyond the control of the mortgagor which render 
        the mortgagor unable to correct the delinquency on the mortgage 
        and unable to make full mortgage payments before the expiration 
        of the 60-day period beginning on the date that notice was sent 
        to the mortgagor in accordance with section 3(b);
            (4) there is a reasonable prospect that the mortgagor will 
        be able to resume full mortgage payments not later than 36 
        months after the beginning of the period for which assistance 
        payments are provided and to pay the mortgage in full by its 
        maturity date or by a later date agreed upon by the mortgagee;
            (5) the property mortgaged is the mortgagor's principal 
        place of residence;
            (6) the mortgagor does not own other property which is 
        subject to a mortgage insured or held by the Secretary;
            (7) the mortgagor has applied to the Secretary for 
        assistance in accordance with section 4; and
            (8) the mortgagor has not been more than 60 days in arrears 
        on a residential mortgage within the 2-year period preceding 
        the delinquency for which assistance is requested, unless the 
        mortgagor can demonstrate that the prior delinquency was the 
        result of financial hardship due to circumstances beyond the 
        control of the mortgagor.
    (b) Effect of Finding of Ineligibility.--If, after reviewing an 
application for assistance submitted in accordance with section 4, the 
Secretary determines that the mortgagor has not met the conditions of 
eligibility described in subsection (a), the mortgagor shall be 
prohibited from reapplying for assistance under this Act until the 
expiration of the 6-month period beginning on the date of such 
determination unless there is a material change in the financial 
circumstances of the mortgagor.
    (c) Determination Relating to Financial Hardship.--In determining 
whether a financial hardship (which may be caused by a reduction in 
income or an increase in expenses, or both) is due to circumstances 
beyond the control of a mortgagor, the Secretary may consider 
information regarding the mortgagor's employment record, credit 
history, and current income. Such circumstances shall include, but not 
be limited to--
            (1) loss of job of a member of the household;
            (2) salary, wage or earnings reduction of a member of the 
        household;
            (3) injury, disability or illness of a member of the 
        household;
            (4) divorce or separation in the household; or
            (5) death of a member of the household.
    (d) Housing Counseling Agencies.--The Secretary shall designate and 
approve nonprofit housing counseling agencies in each State to be 
available to assist the Secretary in implementing the program 
established pursuant to subsection (a) of this section and to section 
4(b)(1)(A). Nonprofit housing agencies designated and approved under 
this subsection shall provide assistance to an eligible mortgagor 
during the entire period that such mortgagor receives assistance under 
this Act.

SEC. 3. LEGAL ACTION.

    (a) Conditions Under Which Legal Action Is Prohibited.--Except as 
otherwise provided in the Act, a mortgagee of a mortgage which is 
insured under the National Housing Act for a 1- to 4-family residence 
may not accelerate the maturity of or commence any legal action 
regarding such a mortgage (including, but not limited to, mortgage 
foreclosure to recover under such obligation) or take possession of any 
security of the mortgagor for such mortgage obligation unless the 
mortgagee has sent to the mortgagor notice pursuant to subsection (b). 
In addition, the mortgagee may not take such action--
            (1) before the expiration of the 30-day period beginning on 
        the date that notice of the intent to take such action was sent 
        to the mortgagor in accordance with subsection (b);
            (2) before the expiration of the 30-day period beginning on 
        the date of the initial meeting between the mortgagor and an 
        approved counseling agency held in accordance with section 
        4(a);
            (3) if an application for such assistance under this Act 
        has been submitted to the Secretary on behalf of the mortgagor 
        and such application--
                    (A) is pending; or
                    (B) has been approved but payments have not yet 
                been made toward the mortgage; or
            (4) if payment toward the mortgage is being made under this 
        Act.
    (b) Requirements of Notice.--The Secretary shall issue regulations 
that include, but are not limited to, a uniform notice under this 
section. Such notice shall be in plain language and shall--
            (1) inform the mortgagor in large bold type that he or she 
        may be eligible for temporary assistance in making mortgage 
        payments;
            (2) include an explanation of the mortgage assistance 
        program under this Act;
            (3) inform the mortgagor that to apply for mortgage 
        assistance, he or she shall attend a meeting in accordance with 
        section 4(a) within 30 days of the date of the notice;
            (4) include the legal action intended and the basis 
        therefore;
            (5) include a list of approved counseling agencies located 
        in the State in which the mortgagor resides;
            (6) be sent via first class mail to the last known address 
        of the mortgagor; and
            (7) be subject to such other requirements as prescribed by 
        the Secretary.

SEC. 4. APPLICATION FOR ASSISTANCE.

    (a) Meeting.--
            (1) In general.--To apply for assistance under this Act, 
        not later than 30 days after receiving notice in accordance 
        with section 3(b), a mortgagor shall attend a face to face 
        meeting with the mortgagee or an approved counseling agency to 
        attempt to prevent legal action for which the notice was sent 
        by restructuring the mortgage payment schedule. A meeting under 
        this paragraph may be conducted over the telephone under 
        circumstances prescribed by the Secretary.
            (2) Notice.--If the mortgagor meets with the approved 
        counseling agency within the period specified in paragraph (1), 
        the approved counseling agency shall send notice of the meeting 
        which includes, but is not limited to, the date of the meeting, 
        to the mortgagee not later than 5 business days after the 
        meeting.
    (b) Preparation; Submission.--
            (1) In general.--If the mortgagor is not able to resolve 
        the default and prevent foreclosure before the expiration of 
        the 30-day period beginning on the date of the meeting, the 
        mortgagor may file an application for mortgage assistance under 
        this Act. At the request of the mortgagor, an approved 
        counseling agency shall--
                    (A) assist the mortgagor in preparing an 
                application for assistance under this Act; and
                    (B) not later than 30 days after the mortgagor 
                initially requests assistance in the preparation of the 
                application, submit the completed application to the 
                Secretary.
            (2) Fees.--The Secretary may pay approved counseling 
        agencies a fee, in an amount determined by the Secretary, for 
        rendering assistance pursuant to this Act.
    (c) Notice to Mortgagee.--If the approved counseling agency submits 
an application for assistance to the Secretary on behalf of a 
mortgagor, the approved counseling agency shall, not later than 5 
business days after submitting the application, inform the mortgagee of 
the date that the application was submitted.
    (d) Form; Contents.--An application for assistance under this Act 
shall be submitted on a form prescribed by the Secretary and shall 
include a financial statement disclosing all assets and liabilities of 
the mortgagor, whether singly or jointly held, and all household income 
regardless of source.
    (e) Effect of Misrepresentation.--A mortgagor who intentionally 
misrepresents any financial information in connection with the filing 
of an application for assistance under this Act may be denied 
assistance and required to immediately repay any amount of assistance 
received, and the mortgagee may, at any time thereafter, take any legal 
action to enforce the mortgage without any further restrictions or 
requirements under this Act.
    (f) Availability.--An application for assistance under this Act may 
be obtained from an approved counseling agency.
    (g) Determination on Application.--
            (1) Time period.--The Secretary shall determine eligibility 
        of a mortgagor for assistance under this Act not later than 60 
        days after receipt of the application of the mortgagor.
            (2) Notification.--Not later than 5 business days after 
        making the determination on an application for assistance, the 
        Secretary shall notify the mortgagor and the mortgagee as to 
        whether the application has been approved or disapproved.

SEC. 5. ASSISTANCE PAYMENTS BY SECRETARY.

    (a) Amount to Bring Mortgage Current.--If the Secretary determines 
that a mortgagor is eligible for assistance under this Act, the 
Secretary shall pay to the mortgagee from the Mutual Mortgage Insurance 
Fund the full amount due to the mortgagee pursuant to the terms of the 
mortgage without regard to any acceleration under the mortgage, or the 
full amount of any alternative mortgage payments agreed to by the 
mortgagee and mortgagor on the date that the application is approved by 
the Secretary. This amount shall include the amount of principal, 
interest, taxes, assessments, ground rents, hazard insurance, any 
mortgage insurance or credit insurance premiums, and reasonable 
attorneys' fees incurred by such mortgagee in relation to the 
arrearage.
    (b) Monthly Assistance Payments.--
            (1) In general.--The Secretary shall make monthly mortgage 
        assistance payments to the mortgagee on behalf of the mortgagor 
        pursuant to this Act.
            (2) Obligation of the mortgagor.--A mortgagor on whose 
        behalf the Secretary is making the mortgage assistance payments 
        shall pay monthly payments to the Secretary. Such payments 
        shall be in an amount which will cause the mortgagor's total 
        housing expense not to exceed 35 percent of the mortgagor's net 
        effective income. This shall be the maximum amount the 
        mortgagor can be required to pay during the 36 months a 
        mortgagor is eligible for mortgage assistance.
            (3) Obligation of the secretary.--Upon receipt of this 
        payment from the mortgagor, the Secretary or the Secretary's 
        duly authorized agent shall send the total mortgage payment 
        directly to the mortgagee.
    (c) Review Upon Delinquency.--If the mortgagor fails to pay to the 
Secretary any amounts due directly from the mortgagor under this 
section not later than 15 days after such due date, the Secretary or 
its designated agent shall review the mortgagor's financial 
circumstances to determine whether a delinquency in payments due from 
the mortgagor under this section or section 6 is the result of a change 
in the mortgagor's financial circumstances since the payment amount was 
last determined. If the delinquency is not the result of a change in 
the mortgagor's financial circumstances, the Secretary shall terminate 
future mortgage assistance payments and the mortgagee may, at any time 
thereafter, take any legal action to enforce its mortgage without any 
further restriction or requirement. If the delinquency is the result of 
such a change, the Secretary shall modify the mortgagor's required 
payments to the Secretary as the Secretary shall determine.
    (d) Period for Assistance.--Payments under this Act shall be 
provided for a period not to exceed 36 months, either consecutively or 
nonconsecutively. The Secretary shall establish procedures for periodic 
review of the mortgagor's financial circumstances for the purpose of 
determining the necessity for continuation, termination, or adjustment 
of the amount of the payments.

SEC. 6. REPAYMENT OF ASSISTANCE.

    (a) Assistance Loan.--The amount by which the assistance payments 
made by the Secretary to the mortgagee exceeds the amount of payments 
made by the mortgagor to the Secretary shall be a loan by the Secretary 
to the mortgagor. The loan shall be evidenced by such documents as the 
Secretary shall determine necessary to protect the interests of the 
United States.
    (b) Repayment of Assistance Loan.--Before making assistance 
payments under this Act on behalf of a mortgagor, the Secretary shall 
enter into an agreement with the mortgagor for repayment of all 
mortgage assistance made by the Secretary under section 5, plus 
interest as provided in subsection (c). The agreement shall provide for 
monthly payments by the mortgagor to the Secretary which (1) shall 
begin once the Secretary has determined that continuation of mortgage 
assistance payments to the mortgagee is unnecessary, and (2) shall be 
in an amount determined as follows:
            (1) Housing expense less than 35 percent.--If the 
        mortgagor's total housing expense is less than 35 percent of 
        the mortgagor's net effective income, the mortgagor shall pay 
        to the Secretary the difference between 35 percent of the 
        mortgagor's net effective income and the mortgagor's total 
        housing expense unless otherwise determined by the Secretary 
        after examining the mortgagor's financial circumstances and 
        ability to contribute to repayment of the mortgage assistance.
            (2) Housing expense greater than 35 percent.--If the 
        mortgagor's total housing expense is more than 35 percent of 
        the mortgagor's net effective income, repayment of the mortgage 
        assistance shall be deferred until the mortgagor's total 
        housing expense is less than 35 percent of the mortgagor's net 
        effective income.
            (3) When mortgage paid in full.--Notwithstanding paragraphs 
        (1) and (2), if repayment of mortgage assistance is not made by 
        the date that the mortgage is paid in full, the mortgagor shall 
        make mortgage assistance repayments in an amount not less than 
        the previous regular mortgage payment until the mortgage 
        assistance is repaid.
    (c) Interest.--Interest shall accrue on all mortgage assistance 
made under this Act at the rate determined monthly by the Secretary of 
the Treasury to be equal to the then current average yield on 
outstanding 30-year bonds issued by the Secretary of the Treasury under 
section 3102 of title 31, United States Code, and shall accrue only 
during the period in which the mortgagor is required to make repayment 
under this section.
    (d) Lien to Secure Repayment of Assistance.--Repayment of amounts 
owed to the Secretary from a mortgagor shall be secured by a mortgage 
lien on the property and by such other obligation as the Secretary may 
require. The lien or other security interest of the Secretary shall not 
be deemed to take priority over any other secured lien or secured 
interest in effect against the mortgagor's property on the date 
assistance payments begin. The Secretary may allow subordination of the 
mortgage assistance lien only if such subordination is necessary to 
permit the mortgagor to obtain a home improvement loan for repairs 
necessary to preserve the property.
    (e) Time for Repayment.--Payments under this section shall be made 
by the mortgagor to the Secretary not later than 14 days after each 
mortgage payment is due under the mortgage (or in the case of repayment 
after the mortgage has been paid in full, not later than the date the 
mortgage payments were due under the mortgage).

SEC. 7. DEFINITIONS.

    For the purposes of this Act, the following definitions apply:
            (1) Approved counseling agency.--The term ``approved 
        counseling agency'' means a nonprofit housing counseling agency 
        approved by the Secretary pursuant to section 2(e).
            (2) Gross household income.--The term ``gross household 
        income'' means the total income of a mortgagor, the mortgagor's 
        spouse, children residing in the same residence as the 
        mortgagor, and any other person living in such residence that 
        is declared by the mortgagor as a dependent for Federal income 
        tax purposes.
            (3) Household.--The term ``household'' means a mortgagor, 
        the mortgagor's spouse, children residing in the same residence 
        as the mortgagor, and any other person living in such residence 
        that is declared by the mortgagor as a dependent for Federal 
        income tax purposes.
            (4) Housing expense.--The term ``housing expense'' means 
        the sum of the mortgagor's monthly maintenance, utility, and 
        hazard insurance expense, taxes, and required mortgage 
        payments, including escrows.
            (5) Mortgagee; mortgagor.--The terms ``mortgagee'' and 
        ``mortgagor'' have the meanings given such terms in section 201 
        of the National Housing Act (12 U.S.C. 1707).
            (6) Net effective income.--The term ``net effective 
        income'' means the gross household income of the mortgagor, 
        less city, State, and Federal income and social security taxes.
            (7) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.
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