110 HR 4178 IH: To amend the Truth in Lending Act to remove an impediment U.S. House of Representatives 2007-11-14 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
I 110th CONGRESS 1st Session H. R. 4178 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.
1.
Short title
This Act may be cited as the Emergency Mortgage Loan Modification Act of 2007.
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:
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. .