Short title

This Act may be cited as the

Family Foreclosure Rescue Corporation Act

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.

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.

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.

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.

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.

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.

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.

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).

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.

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)).

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.

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.

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.

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.