Short title

This Act may be cited as the

Housing Options Made Effective Act

or the

HOME Act

Requirement to file notice of default before foreclosure

Notwithstanding any provision of State law, no judicial or nonjudicial foreclosure may be initiated with respect to any covered residential mortgage (as such term is defined in section 14) unless— (1)the mortgagee has filed for record, in the appropriate public office for filing or recordation of interests in or against real property for the State or jurisdiction in which the property subject to the mortgage is located, a notice of default that includes— (A)a statement identifying the covered residential mortgage, the name or names of the mortgagor and mortgagee, and the book and page, or instrument number, if applicable, where the mortgage is recorded or a description of the property subject to the mortgage; (B)a statement that a breach of the obligation under the mortgage has occurred; (C)a statement setting forth the nature of each breach actually known to the mortgagee and of the mortgagee’s election to sell or cause to be sold the property to satisfy that obligation and any other obligation secured by the mortgage that is in default; and (D)a declaration from the mortgagee that— (i)the mortgagee has complied with section 4 (relating to direct contact with the borrower to provide foreclosure avoidance options); (ii)the mortgagee has used due diligence, in accordance with the requirements of section 5, to contact the borrower; or (iii)the borrower has surrendered the property to the mortgagee; and (2)the 90-day period beginning upon the filing of the notice of default has expired.

Requirements for filing notice of default

Notwithstanding any provision of State law, a mortgagee may not file notice of default, as required under section 2(1), with respect to any covered residential mortgage unless— (1)the mortgagee has complied with the requirements of section 4 (relating to direct contact with the borrower to provide foreclosure avoidance options) and the 30-day period beginning upon compliance with all requirements of section 4 has expired; (2)the mortgagee has used due diligence, in accordance with the requirements of section 5, to contact the borrower and the 30-day period beginning upon compliance by the mortgagee with all requirements of such section has expired; or (3)the borrower has surrendered the property to the mortgagee.

Direct contact with borrower to provide foreclosure avoidance options

(a)

In general

A mortgagee for a covered residential mortgage complies with the requirements of this section only if the mortgagee has taken all of the following actions: (1)

Direct contact

The mortgagee has made direct contact with the borrower via service, in person, or by telephone and notified the borrower— (A)that the borrower has a right to request a meeting with the mortgagee for the purpose of assessing the borrower’s financial situation and providing options for the borrower to avoid foreclosure, which may be held contemporaneously with or subsequent to such contact at the option of the borrower; and (B)of the toll-free telephone number made available by the Department of Housing and Urban Development to locate a housing counseling agency certified by the Department. (2)

Assessment of financial condition and options to avoid foreclosure

(A)

In general

If requested by the borrower, the mortgagee has conducted a meeting with the borrower, not later than 14 days after the request was made, during which the mortgagee has provided the borrower with an assessment of the borrower’s financial situation and options for the borrower to avoid foreclosure. (B)

Telephone meetings

A meeting required under this paragraph may be conducted by telephone. (C)

Timing

A mortgagee may comply with the requirements for a meeting under this paragraph by fulfilling such requirements upon making contact with the borrower in accordance with paragraph (1) or by holding a subsequent meeting. (D)

Borrower’s use of designee

(i)

Authority

A borrower may designate a housing counseling agency certified by the Department of Housing and Urban Development, attorney, or other advisor to discuss options for the borrower to avoid foreclosure with the mortgagee. (ii)

Procedure

To designate a housing counseling agency certified by the Department of Housing and Urban Development for purposes of this subparagraph, a borrower shall send a notarized letter to the mortgagee stating that the borrower has designated such a counselor to discuss options to foreclosure. (iii)

Borrower responsibility for final decision

Notwithstanding the designation of any housing counseling agency by a borrower pursuant to this subparagraph, the mortgagee may not accept a final determination regarding acceptance or denial of any loan modification or workout plan offered to the borrower except directly from the borrower. (3)

Loan modifications and workout plans

Any loan modification or workout plan offered by the mortgagee to the borrower under a covered residential mortgage pursuant to contact or meetings required under this section shall be an offer that— (A)fulfills payment of the principal obligation of the mortgage; and (B)minimizes the loss of the mortgagee. (b)

Participation of loss mitigation personnel

Any loss mitigation personnel of a mortgagee may participate by telephone during any contact required by this section.

Due diligence in attempting To contact borrower

(a)

In general

The mortgagee for a covered residential mortgage shall be considered for purposes of section 2(a)(2) to have used due diligence in accordance with this section to contact the borrower under the mortgage only if the mortgagee complies with the following requirements: (1)

First attempt

The mortgagee shall send to the borrower at the address of the property subject to the mortgage and all other addresses of the borrower known to the mortgagee, by first-class mail, a letter that— (A)states that the borrower is delinquent on payments due under the mortgage; (B)instructs the borrower to contact the mortgagee to discuss options to avoid foreclosure; (C)includes an address and telephone number at which to contact the mortgagee; and (D)includes the toll-free telephone number made available by the Department of Housing and Urban Development to locate a housing counseling agency certified by the Department. (2)

Follow-up contact

After the letter required under paragraph (1) has been sent, the mortgagee shall attempt to contact the borrower by telephone at least three times at different hours and on different days by calling any and all telephone numbers for the borrower that the mortgagee has on file and, if contact is made, shall provide the information specified in subparagraphs (A) through (D) of paragraph (1). (3)

Contact by certified mail

If the borrower does not contact the mortgagee within 10 days after the telephone call requirements of paragraph (2) have been satisfied/ the mortgagee complies with paragraph (2) but is unable to provide the borrower by telephone with the information specified in subparagraphs (A) through (D) of paragraph (1), the mortgagee shall send to the borrower at the address of the property subject to the mortgage and all other addresses of the borrower known to the mortgagee, by certified mail, with return receipt requested, a letter that contains the information specified in subparagraphs (A) through (D) of paragraph (1). (4)

Process server

If the borrower does not contact the mortgagee within 14 days after the certified letter is sent pursuant to paragraph (3), or the certified letter is returned to the mortgagee marked return to sender, the mortgagee shall utilize the services of a private process server to deliver the contents of the certified letter to the borrower. (5)

Web posting

If the mortgagee maintains or has a location on the World Wide Web, the mortgagee shall post a prominent link on the homepage of such website to the following information: (A)A list of financial documents that borrowers in default should collect and be prepared to present to the mortgagee when discussing options for avoiding foreclosure. (B)A toll-free telephone number by which borrowers who wish to discuss options for avoiding foreclosure may discuss such options with the mortgagee. (C)The toll-free telephone number made available by the Department of Housing and Urban Development to locate a housing counseling agency certified by the Department. (6)

Direct contact

If, before the expiration of the 30-day period beginning upon compliance by the mortgagee with all requirements of this section, the borrower requests a meeting with the mortgagee for the purpose of assessing the borrower’s financial situation and providing options for the borrower to avoid foreclosure— (A)the mortgagee shall conduct such a meeting with the borrower in accordance with the requirements of paragraphs (2) and (3) of section 4(a); and (B)for purposes of section 3(1), the mortgagee shall be considered to have complied with section 4 upon completion of the requirements under subparagraph (A) of this paragraph. (b)

Authority To charge fees

The mortgagee under a covered residential mortgage entered into after the date of the enactment of this Act may assess a fee to the borrower in an amount such the aggregate of such fees for all covered mortgages entered into by such mortgagee does not exceed the amount reasonably estimated to be necessary to cover the costs of actions taken pursuant to paragraphs (1) through (5) of subsection (a) with respect to all covered residential mortgages of such mortgagee.

Duties regarding loan modifications and workout plans

(a)

Duties of loan servicers

Any duty any servicer of covered residential mortgages may have to maximize net present value under their pooling and servicing agreements relating to such mortgages is owed to all parties in a loan pool, not to any particular parties, and a servicer of such mortgages acts in the best interests of all parties if the servicer agrees to or implements a loan modification or workout plan for such any such a mortgage for which both of the following apply: (1)The mortgage is in payment default, or payment default is reasonably foreseeable. (2)Anticipated recovery under the loan modification or workout plan relating to the mortgage exceeds the anticipated recovery through foreclosure on a net present value basis. (b)

Offering of workouts

The mortgagee for a covered residential mortgage described in subsection (a) shall offer the borrower a loan modification or workout plan in accordance with section 4.

Accurate credit reporting

(a)

Reporting of subsequent mortgage payments

In the case of any covered residential mortgage for which any loan modification or workout plan has been negotiated between the borrower and the mortgagee and agreed to or implemented, any payments due under the mortgage after such agreement or implementation made on time and pursuant to the loan modification or workout plan shall be reported to the appropriate consumer reporting agency described in section 603(p) of the Fair Credit Reporting Act and included in the consumer file for such borrower at such agency and in any consumer report (as defined in section 603 of the Fair Credit Reporting Act) prepared from such file. (b)

Rule of construction

This section may not be construed to authorize the omission, from any consumer file or consumer report for any borrower under a covered residential mortgage, of any delinquent payments due under the mortgage before or after agreement to or implementation of any loan modification or workout plan for the mortgage.

Loan modification or workout plan

(a)

Inclusion of provision

Any covered residential mortgage agreement that is entered into after the date of the enactment of this Act shall contain a provision that— (1)grants the borrower under the mortgage and the mortgagee the right to negotiate a loan modification or workout plan if— (A)the mortgage is in payment default or payment default is reasonably foreseeable; or (B)in the case of a mortgagee, the anticipated recovery under a loan workout plan exceeds the anticipated recovery through foreclosure on a net present value basis; and (2)requires that any such loan modification or workout plan offered or agreed to comply with the requirements under section 4(a)(3). (b)

Deposit of payment

If the borrower under a covered residential mortgage agrees to a loan modification or workout plan for the mortgage, pursuant to a provision included in a mortgage agreement pursuant to subsection (a) of this section or pursuant to or pursuant to section 4(a), any payments due under the mortgage made pursuant to the loan modification or workout plan shall be deposited directly into the account of the mortgagee. (c)

Rule of construction

This section may not be construed to require the mortgagee for any covered residential mortgage to reduce the principal amount due under the mortgage, or to prevent the mortgagee from taking action to minimize the mortgagee’s financial loss.

Application of partial payments

(a)

Separate account

The mortgagee for a covered residential mortgage may not refuse, and shall credit to the account of the borrower under such mortgage, any partial payments of amounts due under the mortgage. (b)

Effect on foreclosure

Acceptance of partial payments by the mortgagee for a covered residential mortgage shall not affect determination of default under the mortgage.

10.

Rights of renters in foreclosure

(a)

In general

In the case of any foreclosure of any covered residential mortgage for a property: (1)

Right to occupy property

Any successor in interest in such property pursuant to the foreclosure shall assume such interest subject to the rights of any tenant of the property under the authority of a lease entered into before the initiation of such foreclosure to occupy the property until the end of the remaining term of the lease or the eviction pursuant only to a notice of eviction served on such tenant after the expiration of the 6-month period beginning upon foreclosure of the mortgage, whichever occurs first. (2)

Notice to tenant of sale

Upon posting a notice of sale pursuant to foreclosure, the mortgagee shall immediately inform any tenant of the property under the authority of a lease entered into before the initiation of such foreclosure that the property may be sold in connection with such foreclosure, and the mortgagee shall inform any such tenant of the date, time, and location of such sale if that information is known upon the posting of notice of sale. (3)

Requirement to use due diligence to contact tenant

The mortgagee shall use due diligence, in accordance with the requirements of subsection (b), to contact each tenant of the property under the authority of a lease entered into before the initiation of such foreclosure. (b)

Due diligence To contact tenant

The mortgagee for a covered residential mortgage shall be considered for purposes of subsection (a)(3) to have used due diligence in accordance with this subsection to contact the tenant of the property subject to a covered residential mortgage that is being foreclosed only if the mortgagee sends to the tenant at the address of the property subject to the mortgage, by certified mail, with return receipt requested, a letter that contains the following information: (1)A statement that the property may be sold at a foreclosure sale. (2)A statement that such tenant may be evicted pursuant only to a notice of eviction served on such tenant after the expiration of the 6-month period beginning upon foreclosure of the mortgage. (3)A statement that the tenant should contact the borrow under the mortgage or the landlord regarding the foreclosure and continued residence in the property. (4)An address and telephone number at which to contact the borrower or landlord. (c)

Rule of construction

Nothing in this section may be construed to prevent any successor in interest in a property pursuant to foreclosure on a covered residential mortgage from entering into, with any tenant of the property under the authority of a lease entered into before such foreclosure, a new lease for the property or from honoring or extending such previous lease.

11.

Requirement to file notice of sale before foreclosure sale

Notwithstanding any provision of State law, in the case of any covered residential mortgage for which any judicial or non-judicial foreclosure has been initiated, no sale of the property subject to such mortgage may be initiated unless— (1)the mortgagee has filed for record, in the appropriate public office for filing or recordation of interest in or against real property for the State or jurisdiction in which the property subject to the mortgage is located, a notice of sale that includes— (A)a statement that a notice of default required under section 2 was filed; (B)a declaration that the mortgagee has complied with the requirements under section 3 (relating to requirements for filing notice of default); (C)identification of the time, place, and location of the foreclosure auction or sale; and (D)an address and telephone number at which to contact the mortgagee; and (2)a copy of the notice filed under paragraph (1)— (A)is posted on the property to subject to the foreclosure sale for the 21-day period ending upon such sale; (B)published in a daily or weekly publication having wide circulation in the area in which the property is located not less than once a week during the 3-week period ending upon such sale; and (C)is mailed to the borrower not less than 20 days before the sale and to any other party that requests the mortgagee to provide such notice.

12.

Administrative enforcement

Compliance with the requirements of this Act shall be enforced in the same manner and by the same means that compliance with the requirements imposed under the Truth in Lending Act are enforced under section 108 of such Act (15 U.S.C. 1607).

13.

Preemption

This Act shall not preempt any provision of State law that provides greater protection to borrowers under residential mortgages.

14.

Definitions

For purposes of this Act, the following definitions shall apply: (1)

Covered residential mortgage

The term covered residential mortgage means a mortgage that is a first or subsequent lien on residential real property (including individual units of condominiums and cooperatives) that is designed principally for the occupancy of from one to four families and is used as a residence of the borrower under the mortgage. (2)

Mortgagee

The term mortgagee includes, with respect to a mortgage, any beneficiary or authorized agent of the mortgagee. (3)

Secretary

The term Secretary means the Secretary of Housing and Urban Development.

15.

Inapplicability and effective date

(a)

Inapplicability

This Act shall not apply to any covered residential mortgage— (1)for which the mortgagee has filed notice of default before the date of the enactment of this Act; (2)secured by a lien on property that the borrower has surrendered, as evidenced by a written confirmation of the surrender or delivery of the keys to the property to the mortgagee; or (3)the borrower under which has filed for bankruptcy and for which the proceedings have not been finalized. (b)

Effective date

This Act shall take effect on the date of the enactment of this Act.