[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4135 Introduced in House (IH)]
110th CONGRESS
1st Session
H. R. 4135
To establish the Family Foreclosure Rescue Corporation to provide
emergency relief to refinance home mortgages of homeowners in
foreclosure or default.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 9, 2007
Mr. Baca introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To establish the Family Foreclosure Rescue Corporation to provide
emergency relief to refinance home mortgages of homeowners in
foreclosure or default.
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 ``Family Foreclosure Rescue
Corporation Act''.
SEC. 2. PURPOSES.
The purposes of this Act are to provide emergency relief with
respect to home mortgage indebtedness through the establishment of a
corporation to directly refinance home mortgages to homeowners
currently in foreclosure, serious default, or with a reasonable
expectation of imminent, sustained default and--
(1) to extend relief to the owners of homes occupied by
them and who are unable to amortize their debt elsewhere,
including those homeowners whose outstanding mortgage
indebtedness exceeds the value of their home due to recent
declines in the housing market;
(2) to provide necessary funds for refinancing without
reliance on liquidity and credit availability in private
markets;
(3) to stabilize neighborhoods by reducing foreclosures and
the downward impact on house prices created by the threat of
widespread foreclosure;
(4) to encourage loan originators and servicers to modify
the terms of existing non-performing loans to obligations that
borrowers can reasonably repay;
(5) to provide mortgage assistance in an efficient manner
at minimal to no cost to the taxpayer, with corporate profits
returned to the Treasury of the United States; and
(6) to minimize the impacts of the current mortgage crisis
on the broader economy.
SEC. 3. DEFINITIONS.
For purposes of this Act, the following definitions shall apply:
(1) Corporation.--The term ``Corporation'' means the Family
Foreclosure Rescue Corporation established under section 4.
(2) Board.--The term ``Board'' means the Board of Directors
of the Corporation.
(3) Home mortgage.--The term ``home mortgage'' means a
first mortgage on real estate--
(A)(i) in fee simple, upon which there is located a
dwelling for not more than four families;
(ii) on a leasehold under a renewable lease for not
less than 99 years, upon which there is located a
dwelling for not more than four families; or
(iii) that is a single unit in a condominium; and
(B) has a value not exceeding the lower of--
(i) 125 percent of the local area median
home price; or
(ii) 175 percent of the dollar amount
limitation for a single-family residence then
in effect under section 305(a)(2) of the
Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1454(a)(2)) .
(4) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
SEC. 4. ESTABLISHMENT.
The Secretary of the Treasury shall establish a corporation to be
known as the Family Foreclosure Rescue Corporation, which shall be an
instrumentality of the United States, and which shall have authority to
sue and to be sued in any court of competent jurisdiction, Federal or
State.
SEC. 5. BOARD.
(a) In General.--The Corporation shall be under the direction of a
Board of Directors and shall be operated by the Board under such
bylaws, rules, and regulations as the Board may prescribe for the
accomplishment of the purposes and intent of this Act.
(b) Members.--The Board shall consist of seven members, as follows:
(1) Two of the members shall be appointed by the President.
(2) Four of the members shall be appointed by President
from among a list of 10 nominees selected jointly by the
Speaker of the House of Representatives and the majority leader
of the Senate.
(3) The Secretary shall serve as an ex officio member of
the Board.
SEC. 6. CAPITAL STOCK.
(a) In General.--The Corporation shall have capital stock
subscribed to by the Secretary on behalf of the United States
Government in such amount as the Secretary may determine to be
appropriate, to the extent provided in advance in an appropriation Act
for any fiscal year, but not to exceed in the aggregate $200,000,000.
(b) Certificates.--Certificates evidencing shares of nonvoting
capital stock of the Corporation shall be issued by the Corporation to
the Secretary, to the extent of payments made for the capital stock of
the Corporation.
(c) Public Debt Transaction.--For the purpose of purchasing shares
of capital stock of the Corporation, the Secretary may use as a public-
debt transaction the proceeds of any securities issued under chapter 31
of title 31, United States Code.
SEC. 7. BORROWING.
(a) Issuance.--The Corporation may issue bonds in an aggregate
amount not to exceed $150,000,000,000, which may be sold by the
Corporation to obtain funds for carrying out the purposes of this Act,
or exchanged as hereinafter provided. Such bonds shall be issued in
such denominations as the Board shall prescribe, shall mature within a
period of not more than 30 years from the date of their issue, shall
bear interest at a rate not to exceed 5 percent annually, and shall be
fully and unconditionally guaranteed as to principal and interest by
the United States, and such guaranty shall be expressed on the face
thereof.
(b) Payment.--The Corporation shall make bond payments of accrued
interest plus principal in the amount sufficient to return the
principal within a period not to exceed 30 years, and such payments may
be made monthly, quarterly, semi-annually, or annually, in the
discretion of the Corporation. Outstanding principal and accrued
interest shall be paid to the bond holder in the event that the
mortgage issued in exchange for that bond is paid off or title to the
underlying property is transfered by sale or foreclosured.
(c) Treasury Borrowing.--In the event that the Corporation is
unable to pay upon demand, when due, the interest on any such bonds,
the Secretary shall pay to the Corporation the amount of such interest,
which is hereby authorized to be appropriated to the Corporation, and
the Corporation shall pay the amount of such interest to the holders of
the bonds. Upon the payment of such interest by the Secretary, the
amount so paid shall become an obligation of the Corporation to the
United States and shall bear interest at the same rate as that borne by
the bonds upon which the interest has been so paid.
(d) Treatment.--The bonds issued by the Corporation under this
section shall be exempt, both as to principal and interest, from all
taxation (except surtaxes, estate, inheritance, and gift taxes) now or
hereafter imposed by the United States or any District, Territory,
dependency, or possession thereof, or by any State, county,
municipality, or local taxing authority.
SEC. 8. TREATMENT OF CORPORATION.
The Corporation, including its franchise, its capital, reserves,
and surplus, and its loans and income, shall be exempt from taxation
referred to in section 7(c), except that any real property of the
Corporation shall be subject to taxation to the same extent, according
to its value, as other real property is taxed.
SEC. 9. EMERGENCY MORTGAGE RELIEF.
(a) Acquisition of Mortgages.--The Corporation may, during the
three-year period that begins upon the date of the enactment of this
Act--
(1) acquire in exchange for bonds issued by the
Corporation, home mortgages and other obligations and liens
secured by real estate (including the interest of a vendor
under a purchase-money mortgage or contract) recorded or filed
in the proper office or executed prior to the date of the
enactment of this Act, which are currently in default or at
foreseeable risk of default, except that--
(A) in the event that the home mortgage was placed
in a trust or other qualified special purpose vehicle
for the purposes of securitization, acceptance of
Corporation bonds by a duly appointed servicer as
payment in full for the purchase of the home mortgage
shall be construed as a non-foreclosure alternative to
the termination of a loan, equivalent to a short sale
or short payoff;
(B) the face value of the bonds so exchanged and
the cash so advanced shall not exceed, in any case, the
principal balance plus accrued interest on that balance
(exclusive of additional fees incurred as part of
lender workouts and similar actions), as of the time of
acquisition by the Corporation, as determined by an
appraisal made by the Corporation; and
(C) in any case in which the amount of the face
value of the bonds exchanged plus accrued interest
thereon and the cash advanced is less than the amount
the homeowner owes with respect to the home mortgage or
other obligation or lien so acquired by the
Corporation, the Corporation shall credit the
difference between such amounts to the homeowner and
shall reduce the amount owed by the homeowner to the
Corporation, to that extent; and
(2) in connection with any such exchange, make advances in
cash to pay the taxes and assessments on the real estate, to
meet the incidental expenses of the transaction, and to pay
such amounts, not exceeding $750, to the holder of the
mortgage, obligation, or lien acquired as may be the difference
between the face value of the bonds exchanged and the purchase
price of the mortgage, obligation, or lien;
(b) Amortization.--Each home mortgage or other obligation or lien
so acquired shall be carried as a first lien or refinanced as a home
mortgage by the Corporation on the basis of the price paid for the
mortgage, obligation, or lien by the Corporation, and shall be
amortized by means of monthly payments sufficient to retire the
interest and principal within a period of not to exceed 30 years; but
the amortization payments of any homeowner may be made quarterly,
semiannually, or annually, if in the judgment of the Corporation the
situation of the homeowner requires it.
(c) Maximum Interest Rate.--Interest on the unpaid balance of the
obligation of the homeowner to the Corporation shall be at a rate not
exceeding 7.5 percent annually.
(d) Extensions.--The Corporation may at any time grant an extension
of time to any homeowner for the payment of any installment of
principal or interest owed by the homeowner to the Corporation if, in
the judgment of the Corporation, the circumstances of the homeowner and
the condition of the security justify such extension.
(e) Redemption and Recovery of Foreclosed Properties.--The
Corporation may, during the three-year period described in subsection
(a), exchange bonds and advance cash subject to the limitations
provided in subsection (a), to redeem or recover homes lost by the
owners by foreclosure or forced sale by a trustee under a deed of trust
or under power of attorney, or by voluntary surrender to the mortgagee
within two years prior to such exchange or advance.
(f) Real Estate.--As used in this section, the term ``real estate''
includes only real estate described in section 3(3).
SEC. 10. NONDISCRIMINATION.
(a) Location of Real Estate.--No discrimination shall be made under
this Act against any home mortgage by reason of the fact that the real
estate securing such mortgage is located in a municipality, county, or
taxing district which is in default upon any of its obligations.
(b) Characteristics of Applicants.--The Corporation is prohibited
from discriminating in its lending behavior based on the race, color,
religion, sex, national origin, age, disability, or familial status of
the applicant or applicants.
SEC. 11. DENIAL OF APPLICATIONS.
(a) Authority To Deny.--The Corporation may deny a home mortgage
application on the grounds of an applicant's inability to pay or excess
indebtedness, as determined by credit score, household income and
assets, or other criteria, to be determined by the Board or its
designees.
(b) Counseling.--The Corporation shall provide applicants who are
denied a home mortgage issued by the Corporation information sufficient
to identify and contact a housing counseling provider serving the local
area in which the applicant resides who has been certified pursuant to
section 106(f) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(f)).
SEC. 12. DISPOSITION OF REAL ESTATE.
In the event the Corporation takes possession of real estate
through foreclosure, voluntary transfer of title, or otherwise, the
Corporation shall dispose of the real estate in a manner that minimizes
adverse impacts on neighboring property values by staggering sales so
as not to create an excess supply of properties for sale or by offering
properties for rent until disposition is possible. The Corporation may
make necessary repairs to Corporation-owned property to maintain the
value of the property and to prepare it for disposition.
SEC. 13. APPRAISALS.
The Board shall make rules for the appraisal of the property on
which loans are made under this Act, to accomplish the purposes of this
Act.
SEC. 14. OTHER PROVISIONS.
(a) Officers and Employees.--The Corporation shall have power to
select, employ, and fix the compensation of such officers, employees,
attorneys, or agents as shall be necessary for the performance of its
duties under this Act, without regard to the provisions of other laws
applicable to the employment or compensation of officers, employees,
attorneys, or agents of the United States. No such officer, employee,
attorney, or agent shall be paid compensation at a rate in excess of
the rate provided for the members of the Board.
(b) Use of Mails.--The Corporation may use the United States mails
in the same manner and under the same conditions as other departments
and agencies of the United States.
(c) Salaries and Expenses.--The Corporation shall pay such
proportion of the salary and expenses of the members of the Board and
of its officers and employees as the Board may determine to be
equitable, and may use the facilities of Federal Home Loan Banks, upon
making reasonable compensation for such use, as determined by the
Board.
(d) Bylaws, Rules, and Regulations.--The Board may make such
bylaws, rules and regulations, not inconsistent with the provisions of
this Act, as may be necessary for the proper conduct of the affairs of
the Corporation.
(e) Retirement of Stock.--The Corporation shall retire and cancel
the bonds and stock of the Corporation as rapidly as the resources of
the Corporation will permit. Upon the retirement of such stock, the
reasonable value thereof as determined by the Board shall be paid into
the Treasury of the United States and the receipts issued therefor
shall be canceled.
SEC. 15. LIQUIDATION.
The Board shall proceed to liquidate the Corporation when its
purposes have been accomplished, and shall pay any surplus or
accumulated funds into the Treasury of the United States. The
Corporation may declare and pay such dividends to the United States as
may be earned and as in the judgment of the Board it is proper for the
Corporation to pay.
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