[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4178 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 4178

 To amend the Truth in Lending Act to remove an impediment to troubled 
   debt restructuring on the part of holders of residential mortgage 
                     loans, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 14, 2007

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

_______________________________________________________________________

                                 A BILL


 
 To amend the Truth in Lending Act to remove an impediment to troubled 
   debt restructuring on the part of holders of residential mortgage 
                     loans, and for other purposes.

    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 ``Emergency Mortgage Loan Modification 
Act of 2007''.

SEC. 2. SAFE HARBOR FOR HOLDERS ENGAGED IN TROUBLED DEBT RESTRUCTURING 
              WITH REGARD TO RESIDENTIAL MORTGAGE LOANS.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by inserting after section 129 the following 
new section:
``Sec. 129A. Safe harbor for holders engaged in troubled debt 
              restructuring with regard to residential mortgage loans
    ``(a) In General.--A creditor, assignee, servicer, securitizer, or 
other holder of a residential mortgage loan shall not be liable to any 
person under any law or regulation of the United States or any law or 
regulation of any State or political subdivision of any State, or under 
any contract, for entering into a qualified loan modification or 
workout plan on any residential mortgage loan, as provided by this 
subsection, that was consummated on or after January 1, 2004.
    ``(b) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Qualified loan modification or workout plan.--The 
        term `qualified loan modification or workout plan' means a 
        troubled debt restructuring that meets the following criteria 
        with respect to a residential mortgage loan:
                    ``(A) The loan is in payment default under the loan 
                agreements or payment default is imminent or reasonably 
                foreseeable.
                    ``(B) The creditor, assignee, servicer, 
                securitizer, or other holder reasonably believes that 
                the net present value to be realized on the loan, as 
                determined under the applicable contract, will be 
                maximized by entering into the workout plan.
            ``(2) Qualified mortgage.--
                    ``(A) In general.--The term `qualified mortgage' 
                means--
                            ``(i) any residential mortgage loan that 
                        constitutes a first lien on the dwelling or 
                        real property securing the loan and either--
                                    ``(I) has an annual percentage rate 
                                that does not equal or exceed the yield 
                                on securities issued by the Secretary 
                                of the Treasury under chapter 31 of 
                                title 31, United States Code, that bear 
                                comparable periods of maturity by more 
                                than 3 percentage points; or
                                    ``(II) has an annual percentage 
                                rate that does not equal or exceed the 
                                most recent conventional mortgage rate, 
                                or such other annual percentage rate as 
                                may be established by regulation under 
                                paragraph (6), by more than 175 basis 
                                points;
                            ``(ii) any residential mortgage loan that 
                        is not the first lien on the dwelling or real 
                        property securing the loan and either--
                                    ``(I) has an annual percentage rate 
                                that does not equal or exceed the yield 
                                on securities issued by the Secretary 
                                of the Treasury under chapter 31 of 
                                title 31, United States Code, that bear 
                                comparable periods of maturity by more 
                                than 5 percentage points; or
                                    ``(II) has an annual percentage 
                                rate that does not equal or exceed the 
                                most recent conventional mortgage rate, 
                                or such other annual percentage rate as 
                                may be established by regulation under 
                                paragraph (6), by more than 375 basis 
                                points; and
                            ``(iii) a loan made or guaranteed by the 
                        Secretary of Veterans Affairs.
                    ``(B) Most recent conventional mortgage rate.--The 
                term `most recent conventional mortgage rate' means the 
                contract interest rate on commitments for fixed-rate 
                first mortgages most recently published in the Federal 
                Reserve Statistical Release on selected interest rates 
                (daily or weekly), and commonly referred to as the H.15 
                release (or any successor publication), in the week 
                preceding a date of determination for purposes of 
                applying this subsection.
            ``(3) Residential mortgage loan defined.--For purposes of 
        this subsection, the term `residential mortgage loan' means a 
        loan that is secured by a lien on an owner-occupied dwelling 
        and is not a qualified mortgage.
            ``(4) Securitization vehicle.--The term `securitization 
        vehicle' means a trust, corporation, partnership, limited 
        liability entity, or special purpose entity that--
                    ``(A) is the issuer, or is created by the issuer, 
                of mortgage pass-through certificates, participation 
                certificates, mortgage-backed securities, or other 
                similar securities backed by a pool of assets that 
                includes residential mortgage loans; and
                    ``(B) holds such loans.
            ``(5) Securitizer.--The term `securitizer' means the person 
        that transfers, conveys, or assigns, or causes the transfer, 
        conveyance, or assignment of, residential mortgage loans, 
        including through a special purpose vehicle, to any 
        securitization vehicle, excluding any trustee that holds such 
        loans solely for the benefit of the securitization vehicle.
    ``(c) Effective Period.--This section shall apply only with respect 
to qualified loan modification or workout plans initiated during the 6-
month period beginning on the date of the enactment of this section.''.
    (b) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by adding after the item relating to 
section 129 the following new item:

``129A. Safe harbor for holders engaged in troubled debt restructuring 
                            with regard to residential mortgage 
                            loans.''.
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