Short title

This Act may be cited as the

Homeowners’ Protection Act of 2008

Waiver of counseling requirement when houses are in foreclosure

Section 109(h) of title 11, United States Code, is amended by adding at the end the following:

(5)The requirements of paragraph (1) shall not apply in a case under chapter 13 with respect to a debtor who submits to the court a certification that the debtor has received notice that the holder of a claim secured by the debtor's principal residence may commence a foreclosure on the debtor's principal residence.

Authority to modify certain mortgages

Section 1322(b) of title 11, United States Code, is amended— (1)by redesignating paragraph (11) as paragraph (12), (2)in paragraph (10) by striking and at the end, and (3)by inserting after paragraph (10) the following:

(11)notwithstanding paragraph (2) and otherwise applicable nonbankruptcy law, with respect to a claim for a debt for a loan secured by a security interest in the debtor’s principal residence that is the subject of a notice that a foreclosure may be commenced, modify the rights of the holder of such claim— (A)by reducing such claim to equal the value of the interest of the debtor in such residence securing such claim; (B)by waiving any otherwise applicable early repayment or prepayment penalties; (C)if any applicable rate of interest is adjustable under the terms of such security interest by prohibiting, reducing, or delaying adjustments to such rate of interest applicable on and after the date of filing of the plan; and (D)by modifying the terms and conditions of such loan— (i)to extend the repayment period for a period that is the longer of 40 years (reduced by the period for which such loan has been outstanding) or the remaining term of such loan, beginning on the date of the order for relief under this chapter; and (ii)to provide for the payment of interest accruing after the date of the order for relief under this chapter at an annual percentage rate calculated at a fixed annual percentage rate, in an amount equal to the then most recently published annual yield on conventional mortgages published by the Board of Governors of the Federal Reserve System, as of the applicable time set forth in the rules of the Board, plus a reasonable premium for risk; and

Combating excessive fees

Section 1322(c) of title 11, the United States Code, is amended— (1)in paragraph (1) by striking and at the end, (2)in paragraph (2) by striking the period at the end and inserting a semicolon, and (3)by adding at the end the following:

(3)the debtor, the debtor’s property, and property of the estate are not liable for a fee, cost, or charge that is incurred while the case is pending and arises from a debt that is secured by the debtor’s principal residence except to the extent that— (A)the holder of the claim for such debt files with the court notice of such fee, cost, or charge before the earlier of— (i)1 year after such fee, cost, or charge is incurred; or (ii)60 days before the closing of the case; and (B)such fee, cost, or charge— (i)is lawful under applicable nonbankruptcy law, reasonable, and provided for in the applicable security agreement; and (ii)is secured by property the value of which is greater than the amount of such claim, including such fee, cost, or charge; (4)the failure of a party to give notice described in paragraph (3) shall be deemed a waiver of any claim for fees, costs, or charges described in paragraph (3) for all purposes, and any attempt to collect such fees, costs, or charges shall constitute a violation of section 524(a)(2) or, if the violation occurs before the date of discharge, of section 362(a); and (5)a plan may provide for the waiver of any prepayment penalty on a claim secured by the debtor’s principal residence.

Confirmation of plan

Section 1325(a) of title 11, the United States Code, is amended— (1)in paragraph (8) by striking and at the end, (2)in paragraph (9) by striking the period at the end and inserting a semicolon, and (3)by inserting after paragraph (9) the following:

(10)notwithstanding subclause (I) of paragraph (5)(B)(i), the plan provides that the holder of a claim whose rights are modified pursuant to section 1322(b)(11) retain the lien until the later of— (A)the payment of such claim as reduced and modified; or (B)discharge under section 1328; and (11)the plan modifies a claim in accordance with section 1322(b)(11), and the court finds that such modification is in good faith.

Discharge

Section 1328 of title 11, the United States Code, is amended— (1)in subsection (a)— (A)by inserting (other than payments to holders of claims whose rights are modified under section 1322(b)(11) after paid the 1st place it appears, and (B)in paragraph (1) by inserting or, to the extent of the unpaid portion of the claim as reduced, provided for in section 1322(b)(11) after 1322(b)(5), and (2)in subsection (c)(1) by inserting or, to the extent of the unpaid portion of the claim as reduced, provided for in section 1322(b)(11) after 1322(b)(5).

Effective date; application of amendments

(a)

Effective date

Except as provided in subsection (b), this Act and the amendments made by this Act shall take effect on the date of the enactment of this Act. (b)

Application of amendments

The amendments made by this Act shall apply only with respect to cases commenced under title 11 of the United States Code on or after the date of the enactment of this Act.