[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1386 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 1386

  To amend the Housing and Urban Development Act of 1968, to provide 
 better assistance to low- and moderate-income families, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 14, 2007

   Mr. Reed introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
  To amend the Housing and Urban Development Act of 1968, to provide 
 better assistance to low- and moderate-income families, 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 ``Homeownership Protection and 
Enhancement Act of 2007''.

SEC. 2. REFORM OF SECTION 106 OF THE HOUSING AND URBAN DEVELOPMENT ACT 
              OF 1968.

    Section 106 of the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701x) is amended--
            (1) in subsection (c)--
                    (A) in paragraph (3)--
                            (i) in subparagraph (A)(ii), by striking 
                        ``; and'' and inserting ``; or''; and
                            (ii) in subparagraph (A)(iii), by striking 
                        ``involving principal'' and all that follows 
                        through ``the appraised'' and inserting ``in 
                        which a homeowner has total equity equal to 
                        less than 3 percent of the appraised'';
                    (B) in paragraph (4)--
                            (i) in subparagraph (C)--
                                    (I) in clause (i), by striking ``; 
                                or'' and inserting a semicolon;
                                    (II) in clause (ii), by striking 
                                the period at the end and inserting a 
                                semicolon;
                                    (III) by adding at the end the 
                                following:
                            ``(iii) a significant reduction in the 
                        income of the household due to divorce or 
                        death; or
                            ``(iv) a significant increase in basic 
                        expenses of the homeowner or an immediate 
                        family member of the homeowner (including the 
                        spouse, child, or parent for whom the homeowner 
                        provides substantial care or financial 
                        assistance) due to--
                                    ``(I) an unexpected or significant 
                                increase in medical expenses;
                                    ``(II) a divorce;
                                    ``(III) unexpected and significant 
                                damage to the property, the repair of 
                                which will not be covered by private or 
                                public insurance;
                                    ``(IV) a large property-tax 
                                increase; or
                                    ``(V) a large increase in 
                                condominium or cooperative fees, dues, 
                                or assessments; or''; and
                            (ii) by adding at the end the following:
                    ``(D) the Secretary of Housing and Urban 
                Development determines that the annual income of the 
                homeowner is no greater than the annual income 
                established by the Secretary as being of low- or 
                moderate-income.'';
                    (C) in paragraph (5)--
                            (i) by striking subparagraph (A) and 
                        inserting a new subparagraph (A) as follows:
                    ``(A) Notification of availability of pre-purchase 
                homeownership counseling, homeownership counseling, and 
                homeownership protection center services.--
                            ``(i) Notification to mortgage applicants 
                        at time of mortgage application.--
                                    ``(I) In general.--A proposed 
                                mortgagee shall provide notice to any 
                                applicant for a mortgage described in 
                                paragraph (4).
                                    ``(II) Content of notice.--The 
                                notice required under subclause (I) 
                                shall--
                                            ``(aa) if provided to an 
                                        eligible mortgage applicant, 
                                        state that completion of a 
                                        counseling program is required 
                                        for insurance pursuant to 
                                        section 203 of the National 
                                        Housing Act (12 U.S.C.1709);
                                            ``(bb) notify the mortgage 
                                        applicant of the availability 
                                        of homeownership counseling 
                                        provided by non-profit 
                                        organizations approved by the 
                                        Secretary and experienced in 
                                        the provision of pre-purchase 
                                        homeownership counseling, or 
                                        provide the toll-free telephone 
                                        number established by the 
                                        Secretary under subparagraph 
                                        (D)(i); and
                                            ``(cc) notify the mortgage 
                                        applicant or homeowner by a 
                                        statement or notice, written in 
                                        plain English by the Secretary 
                                        of Housing and Urban 
                                        Development, in consultation 
                                        with the Secretary of Defense 
                                        and the Secretary of the 
                                        Treasury, explaining the 
                                        mortgage and foreclosure rights 
                                        of servicemembers, and the 
                                        dependents of such 
                                        servicemembers, under the 
                                        Servicemembers Civil Relief Act 
                                        (50 U.S.C. App. 501 et seq.), 
                                        including the toll-free 
                                        military one source number to 
                                        call if servicemembers, or the 
                                        dependents of such 
                                        servicemembers, require further 
                                        assistance.
                            ``(ii) Notification at time of closing of 
                        availability of counseling upon delinquency and 
                        services of state homeownership protection 
                        centers.--
                                    ``(I) In general.--At the time of 
                                closing, and together with the final 
                                signed loan documents, a mortgagee 
                                shall provide to the homeowner a plain 
                                language statement in conspicuous 16-
                                point type or larger which shall 
                                include the following:
                                            ``(aa) Counseling 
                                        statement.--A counseling 
                                        statement that reads as 
                                        follows:
                                        `If you are more than 30 days 
                                        late on your mortgage payments, 
                                        your lender or loan servicer is 
                                        required by law to notify you 
                                        of agencies approved by the 
                                        United States Department of 
                                        Housing and Urban Development 
                                        (HUD) that may be able to 
                                        assist you, including the 
                                        contact information for your 
                                        State Homeownership Protection 
                                        Center if there is one 
                                        operating in your State. Before 
                                        you miss another mortgage 
                                        payment, you are strongly 
                                        encouraged to contact your 
                                        lender or loan servicer or one 
                                        of the agencies on the approved 
                                        list for assistance. If you are 
                                        more than 60 days late on your 
                                        mortgage payments, your lender 
                                        or loan servicer is required by 
                                        law to send you a second 
                                        notification containing this 
                                        information. In addition, if 
                                        you are more than 60 days late 
                                        on your mortgage payment and 
                                        you are registered with a State 
                                        Homeownership Protection 
                                        Center, your lender or loan 
                                        servicer also will be required 
                                        to notify the Center, so that 
                                        the Center can contact you 
                                        regarding any assistance it may 
                                        be able to provide.
                                            ``(bb) Counseling agency 
                                        listing.--A listing of at least 
                                        5 housing counseling agencies 
                                        approved by the Department of 
                                        Housing and Urban Development, 
                                        at least 1 of which is located 
                                        in the State in which the 
                                        property to be mortgaged is 
                                        located.
                                            ``(cc) Toll-free number.--
                                        The listing of the toll-free 
                                        telephone number established by 
                                        the Secretary under 
                                        subparagraph (D)(i).
                                            ``(dd) Contact information 
                                        for state homeownership 
                                        protection center.--The contact 
                                        information, including 
                                        telephone number, email 
                                        address, and physical address 
                                        of the State Homeownership 
                                        Protection Center, if such a 
                                        Center is operating in the 
                                        State in which the property to 
                                        be mortgaged is located.
                                            ``(ee) Notice to 
                                        servicemembers or dependents of 
                                        servicemembers.--A statement, 
                                        written in plain English, 
                                        drafted by the Secretary of 
                                        Housing and Urban Development, 
                                        in consultation with the 
                                        Secretary of Defense and the 
                                        Secretary of the Treasury, 
                                        explaining the mortgage and 
                                        foreclosure rights of 
                                        servicemembers, and the 
                                        dependents of such 
                                        servicemembers, under the 
                                        Servicemembers Civil Relief Act 
                                        (50 U.S.C. App. 501 et seq.), 
                                        including the toll-free 
                                        military one source number to 
                                        call if servicemembers, or the 
                                        dependents of such 
                                        servicemembers, require further 
                                        assistance.
                                            ``(ff) Summary of duty to 
                                        engage in loss mitigation.--A 
                                        brief summary of the obligation 
                                        of the mortgagee to engage in 
                                        reasonable loss mitigation 
                                        activities for the purpose of 
                                        providing an alternative to 
                                        foreclosure, including language 
                                        informing the homeowner that 
                                        the mortgagee's failure to 
                                        comply with such loss 
                                        mitigation requirements 
                                        constitutes a defense to the 
                                        foreclosure.
                                    ``(II) Manner of disclosure.--
                                            ``(aa) 1 document.--At the 
                                        discretion of the mortgagee, 
                                        the mortgagee may provide all 
                                        the information required under 
                                        clause (I) in one single 
                                        document.
                                            ``(bb) Required description 
                                        of document at closing.--A 
                                        mortgagee shall briefly 
                                        describe the document in item 
                                        (aa) to the homeowner during 
                                        closing.
                                    ``(III) Other requirements at time 
                                of closing for mortgagees operating in 
                                a state where a state homeownership 
                                protection center is located.--
                                            ``(aa) Registration with 
                                        state homeownership protection 
                                        centers.--In addition to the 
                                        required documents described in 
                                        subclauses (I) and (II), at the 
                                        time of closing the mortgagee 
                                        shall explain in writing and 
                                        verbally that the homeowner's 
                                        name and contact information 
                                        will be registered with a State 
                                        Homeownership Protection Center 
                                        so that the Center can attempt 
                                        to reach the homeowner if the 
                                        homeowner is 60 days or more 
                                        late in making any mortgage 
                                        payment.
                                            ``(bb) Brochures.--The 
                                        mortgagee shall distribute to a 
                                        homeowner any brochure, 
                                        pamphlet, or other brief 
                                        document prepared by the State 
                                        Homeownership Protection Center 
                                        that describes the services 
                                        provided by the Center.
                                            ``(cc) Duty of mortgagee to 
                                        forward information.--The 
                                        mortgagee shall forward to the 
                                        State Homeownership Protection 
                                        Center the contact information 
                                        of the mortgage applicant and 
                                        shall agree to notify the 
                                        Center if the mortgage payment 
                                        of the homeowner is or becomes 
                                        more than 60 days late so that 
                                        the Center can attempt to reach 
                                        the homeowner.
                                            ``(dd) Required disclosures 
                                        to the homeowner.--Each 
                                        homeowner shall be informed 
                                        that being registered with a 
                                        State Homeownership Protection 
                                        Center under this subclause may 
                                        provide easier access to 
                                        assistance in case of financial 
                                        difficulty and that no 
                                        information that would make it 
                                        possible to identify the 
                                        homeowner will be given to any 
                                        other entity for any reason 
                                        without the prior approval of 
                                        the homeowner.
                                            ``(ee) Additional 
                                        responsibilities of 
                                        mortgagees.--The mortgagee 
                                        shall note registration with 
                                        the State Homeownership 
                                        Protection Center with the loan 
                                        information of the homeowner, 
                                        however such information is 
                                        stored, and shall ensure that 
                                        any entity which purchases the 
                                        loan of the homeowner is aware 
                                        of where they are registered 
                                        and the requirement that the 
                                        State Homeownership Protection 
                                        Center be notified if the 
                                        homeowner is or becomes more 
                                        than 60 days late on any 
                                        mortgage payment.
                            ``(iii) Notice upon delinquency of 
                        homeowner.--
                                    ``(I) In general.--Except as 
                                provided in subparagraph (C)--
                                            ``(aa) if a homeowner 
                                        becomes 30 or more days late on 
                                        any mortgage payment, the 
                                        mortgagee shall provide notice 
                                        in the manner described in 
                                        clause (iv) to any eligible 
                                        homeowner who fails to pay any 
                                        amount within 30 days of the 
                                        date the amount is due under a 
                                        home loan;
                                            ``(bb) if a homeowner 
                                        becomes 60 or more days late on 
                                        any mortgage payment, the 
                                        mortgagee shall provide notice 
                                        to the homeowner a second time 
                                        in the manner described in 
                                        clause (iv) to any eligible 
                                        homeowner who fails to pay any 
                                        amount within 60 days of the 
                                        date the amount is due under a 
                                        home loan; and
                                            ``(cc) if a homeowner 
                                        becomes 60 or more days late on 
                                        any mortgage payment, and such 
                                        homeowner is registered with a 
                                        State Homeownership Protection 
                                        Center, the mortgagee shall 
                                        provide notice to that State 
                                        Homeownership Protection 
                                        Center.
                                    ``(II) Failure to provide notice.--
                                Failure to provide notice to a 
                                homeowner or to a State Homeownership 
                                Protection Center required under this 
                                subsection constitutes a defense to 
                                foreclosure.
                            ``(iv) Content of notice upon delinquency 
                        of homeowner.--
                                    ``(I) Registered homeowners.--The 
                                notice required under clause (iii) for 
                                a homeowner registered with a State 
                                Homeownership Protection Center shall--
                                            ``(aa) notify the homeowner 
                                        of the availability of any 
                                        homeownership counseling 
                                        provided by the mortgagee;
                                            ``(bb) provide the 
                                        homeowner a current copy of the 
                                        statement described in clause 
                                        (ii)(I) provided to the 
                                        homeowner at closing; and
                                            ``(cc) when the homeowner 
                                        becomes 60 or more days late on 
                                        any mortgage payment--

                                                    ``(AA) notify the 
                                                State Homeownership 
                                                Protection Center with 
                                                whom the homeowner is 
                                                registered; and

                                                    ``(BB) provide the 
                                                Center with the contact 
                                                information of the 
                                                homeowner.

                                    ``(II) Non-registered homeowners.--
                                The notice required under clause (iii) 
                                for a homeowner not registered with a 
                                State Homeownership Protection Center 
                                shall--
                                            ``(aa) notify the homeowner 
                                        of the availability of any 
                                        homeownership counseling 
                                        provided by the mortgagee; and
                                            ``(bb) provide the 
                                        homeowner a current copy of the 
                                        statement described in clause 
                                        (ii)(I) provided to the 
                                        homeowner at closing.
                                    ``(III) Mailings.--When the notice 
                                required under clause (iii) is sent, 
                                the outside of the mailing envelope 
                                shall state that such mailing contains 
                                federally required information on 
                                Federal Government-approved financial 
                                counseling agencies.'';
                            (ii) by striking subparagraph (B) and 
                        inserting a new subparagraph (B) as follows:
                    ``(B) Deadline for notification.--The notification 
                required in subparagraph (A) shall be made in a manner 
                approved by the Secretary.'';
                            (iii) in subparagraph (D)(i)(I), by 
                        inserting ``post-purchase'' before 
                        ``homeownership counseling''; and
                            (iv) by adding at the end the following:
                    ``(F) Nationwide availability.--The Secretary shall 
                ensure that each State is served by at least one local, 
                regional, or national agency with an office in the 
                State that provides the services described in this 
                paragraph.'';
                    (D) in paragraph (6)(D), by inserting ``for a 
                primary residence'' before the period;
            (2) by striking subsection (d) and inserting the following:
    ``(d) Grants to States for State Homeownership Protection 
Centers.--
            ``(1) In general.--The Secretary shall award grants, on a 
        competitive basis, to State housing finance agencies or any 
        other designated State agency, to enable such agencies to 
        establish and operate State Homeownership Protection Centers.
            ``(2) Notification of funding availability.--The Secretary 
        shall release a Notification of Funding Availability for grants 
        awarded under this subsection for a fiscal year not later than 
        3 months after the date of enactment of the appropriate Act 
        making appropriations for the Department of Housing and Urban 
        Development for the fiscal year.
            ``(3) Application.--
                    ``(A) Submission to the secretary.--To be eligible 
                to receive a grant under this subsection, a State 
                housing finance agency or any other designated State 
                agency shall submit an application to the Secretary, at 
                such time and in such manner as the Secretary may 
                require, and containing such information as the 
                Secretary determines necessary--
                            ``(i) to determine the ability of such 
                        agency to operate a Center; and
                            ``(ii) to establish priorities for funding 
                        based on need.
                    ``(B) Announcement of awards.--The Secretary shall 
                announce, within 4 months after the last date for the 
                submission of applications described in subparagraph 
                (A) for a fiscal year, the grants conditionally awarded 
                under this subsection for that fiscal year.
            ``(4) Purpose.--The purpose of any State Homeownership 
        Protection Center established under paragraph (1) shall be--
                    ``(A) to provide a centralized location for 
                information on, and referral to, public services 
                available to assist a homeowner who is in default on 
                their home loan;
                    ``(B) to provide a homeowner with referrals to 
                counseling agencies approved by the Department of 
                Housing and Urban Development that may be able to 
                assist that homeowner, if that homeowner is in default 
                on their home loan; and
                    ``(C) to attempt to contact each homeowner who is 
                registered with the Center who is more than 60 days 
                late on any mortgage payment with the goal of--
                            ``(i) determining--
                                    ``(I) if such homeowner needs 
                                assistance in avoiding foreclosure on 
                                their home; and
                                    ``(II) what kind of assistance is 
                                needed by such homeowner to avoid 
                                foreclosure on their home; and
                            ``(ii) providing referrals to any 
                        appropriate programs or entities that may be 
                        able to provide any such assistance.
            ``(5) Homeownership protection centers.--
                    ``(A) Use of funds.--Each State housing finance 
                agency or any other designated State agency, who is a 
                recipient of a grant under paragraph (1) may only use 
                such grant amounts to establish and operate State 
                Homeownership Protection Centers in that State.
                    ``(B) Required activities.--Each State 
                Homeownership Protection Center established under this 
                section shall, at a minimum--
                            ``(i) provide a toll-free number through 
                        which any homeowner in financial distress can 
                        receive--
                                    ``(I) information on--
                                            ``(aa) the Center and its 
                                        services; and
                                            ``(bb) public programs that 
                                        provide assistance to 
                                        homeowners; and
                                    ``(II) a listing of counseling 
                                agencies approved by the Department of 
                                Housing and Urban Development;
                            ``(ii) provide information to homeowners on 
                        available community resources relating to 
                        homeownership, including--
                                    ``(I) public assistance or benefits 
                                programs;
                                    ``(II) mortgage assistance 
                                programs;
                                    ``(III) home repair assistance 
                                programs;
                                    ``(IV) legal assistance programs;
                                    ``(V) utility assistance programs;
                                    ``(VI) food assistance programs; 
                                and
                                    ``(VII) other Federal, State, or 
                                local government funded social service;
                            ``(iii) provide staff who--
                                    ``(I) are able to conduct a brief 
                                assessment of the situation of a 
                                homeowner; and
                                    ``(II) based on such assessment 
                                can--
                                            ``(aa) make appropriate 
                                        referrals to, and provide 
                                        application information 
                                        regarding, programs that can 
                                        provide assistance to such 
                                        homeowner; and
                                            ``(bb) provide a listing of 
                                        counseling agencies approved by 
                                        the Department of Housing and 
                                        Urban Development; and
                            ``(iv) provide to any homeowner in 
                        financial distress access to applications for 
                        public assistance or benefits program which may 
                        be of assistance to such homeowner.
                    ``(C) Additional activities.--In addition to the 
                services required under subparagraph (B), each State 
                Homeownership Protection Center shall--
                            ``(i) be technologically capable of--
                                    ``(I) accepting and recording in a 
                                secure database the contact information 
                                of any homeowner forwarded to the 
                                Center by a mortgagee pursuant to 
                                subsection (c)(5)(A)(ii)(III); and
                                    ``(II) accessing the contact 
                                information described in subclause (I), 
                                if the Center is notified by a 
                                mortgagee pursuant to subsection 
                                (c)(5)(A)(ii)(III) that the homeowner 
                                is 60 or more days late in paying any 
                                amount due under the home loan of such 
                                homeowner;
                            ``(ii) if notified by a mortgagee pursuant 
                        to subsection (c)(5)(A)(ii)(III) that a 
                        homeowner who is registered with the Center is 
                        60 or more days late in paying any amount due 
                        under the home loan of such homeowner, attempt 
                        to contact such homeowner to provide assistance 
                        or suggest public programs or counseling 
                        agencies that may provide assistance to the 
                        homeowner; and
                            ``(iii) not release to the public or to any 
                        third party the name of any homeowner who is 
                        registered with the Center, or of any person 
                        who visits the Center for assistance, or any 
                        other information that would make it possible 
                        to identify such a person, without the prior 
                        written consent of such homeowner or person.
            ``(6) Grants to states with homeownership protection 
        centers to assist homeowners in default.--
                    ``(A) Grant authority.--The Secretary shall award 
                competitive grants to State housing finance agencies, 
                or to any other designated State agency, located in a 
                State with a State Homeownership Protection Center 
                established under paragraph (1), to enable such 
                agencies in partnership with State Homeownership 
                Protection Centers to provide 1-time emergency grants 
                or subsidized loans to eligible homeowners to assist 
                such homeowners in satisfying any amounts past due on 
                their home loans.
                    ``(B) Notification of funding availability.--The 
                Secretary shall release a Notification of Funding 
                Availability for grants awarded under this paragraph 
                for a fiscal year not later than 3 months after the 
                date of enactment of the appropriate Act making 
                appropriations for the Department of Housing and Urban 
                Development for the fiscal year.
                    ``(C) Application.--
                            ``(i) Submission to the secretary.--To be 
                        eligible to receive a grant under this 
                        paragraph a State housing finance agency or any 
                        other designated State agency located in a 
                        State where a State Homeownership Protection 
                        Center is located, shall submit an application 
                        to the Secretary at such time and in such 
                        manner as the Secretary may require, and 
                        containing such information as the Secretary 
                        determines necessary--
                                    ``(I) to determine compliance with 
                                the requirements and criteria under 
                                this paragraph; and
                                    ``(II) to establish priorities for 
                                funding based on need.
                            ``(ii) Announcement of awards.--The 
                        Secretary shall announce, within 4 months after 
                        the last date for the submission of 
                        applications described in this paragraph for a 
                        fiscal year, the grants conditionally awarded 
                        under this paragraph for that fiscal year.
                    ``(D) Other requirements.--
                            ``(i) Separate accounts.--To be eligible to 
                        receive any amounts awarded under this 
                        paragraph and prior to providing any emergency 
                        grants or subsidized loans, a State housing 
                        finance agency or any other designated State 
                        agency shall establish a separate account in 
                        which such amounts are to be held.
                            ``(ii) Limited use.--Any amounts made 
                        available for purposes of this paragraph in any 
                        appropriations Act shall be used only to 
                        provide 1-time emergency grants or subsidized 
                        loans to eligible homeowners to assist such 
                        homeowners in satisfying any amounts past due 
                        on their home loan as authorized under 
                        subparagraph (A).
                            ``(iii) Repayment of loans.--Any amounts 
                        repaid on a subsidized loan made under this 
                        paragraph shall be deposited back into the 
                        separate account established under clause (i) 
                        from which the loan funds originated.
                            ``(iv) Other funding.--Amounts donated or 
                        otherwise directed to be used for purposes of 
                        this paragraph may be deposited in any separate 
                        account established under clause (i) to help 
                        capitalize such account.
                    ``(E) Program requirements.--
                            ``(i) In general.--Each State housing 
                        finance agency or any other designated State 
                        agency that is a recipient of a grant to assist 
                        homeowners in default under this paragraph, in 
                        cooperation with the State Homeownership 
                        Protection Centers in such State, shall develop 
                        program requirements for eligible homeowners 
                        seeking a 1-time emergency grant or subsidized 
                        loan under this paragraph.
                            ``(ii) Required content.--The program 
                        requirements developed under clause (i) shall, 
                        at a minimum, include the following:
                                    ``(I) That any loan or grant under 
                                this paragraph may be provided for up 
                                to a four-family owner-occupied 
                                residence, including one-family units 
                                in a condominium project or a 
                                membership interest and occupancy 
                                agreement in a cooperative housing 
                                project, that is used as the principal 
                                residence of the applicant seeking such 
                                grant or loan.
                                    ``(II) That each applicant for a 
                                loan or grant shall be a permanent 
                                resident of the State in which the 
                                principal residence of such applicant 
                                is located.
                                    ``(III) That each applicant--
                                            ``(aa) provide 
                                        documentation that such 
                                        applicant either--

                                                    ``(AA) is suffering 
                                                from financial hardship 
                                                which is unexpected or 
                                                due to circumstances 
                                                beyond the control of 
                                                the applicant; or

                                                    ``(BB) is eligible 
                                                for homeownership 
                                                counseling under 
                                                subsection (c)(4); and

                                            ``(bb) offer proof that 
                                        such applicant is unable, 
                                        without financial assistance--

                                                    ``(AA) to correct 
                                                any delinquency on any 
                                                amounts past due on the 
                                                home loan of such 
                                                applicant within a 
                                                reasonable time; and

                                                    ``(BB) to make full 
                                                payment on any home 
                                                loan payment due within 
                                                the next 30 days.

                                    ``(IV) That a State Homeownership 
                                Protection Center, State housing 
                                finance agency, or any other designated 
                                State agency, or its designee, has 
                                determined, in its discretion, that 
                                there is a reasonable prospect that any 
                                applicant for a grant or loan under 
                                this paragraph will be able to resume 
                                full payments on the home loan of such 
                                applicant not later than 12 months 
                                after the date on which such applicant 
                                will first receive any grant or loan 
                                amounts under this paragraph.
                                    ``(V) That the applicant has not, 
                                at any point prior, and with respect to 
                                the same real property, previously 
                                received a grant or loan under this 
                                paragraph.
                    ``(F) Loan requirements.--
                            ``(i) Rate of interest.--Any loan under 
                        this section shall carry a simple annual 
                        percentage rate of interest which shall not 
                        exceed the prime rate of interest, as such 
                        prime rate is determined from time to time by 
                        at least 75 percent of the 30 largest 
                        depository institutions in the Nation.
                            ``(ii) No compounding.--Interest on the 
                        outstanding principal balance of any loan under 
                        this section shall not compound.
                            ``(iii) Balance due.--
                                    ``(I) In general.--The principal of 
                                any loan made under this paragraph, 
                                including any interest accrued on such 
                                principal, shall not be due and payable 
                                unless--
                                            ``(aa) the real property 
                                        securing such loan is sold or 
                                        transferred; or
                                            ``(bb) the last surviving 
                                        homeowner of such real property 
                                        dies.
                                    ``(II) Deposit of balance due.--If 
                                either event described in subclause (I) 
                                occurs, the principal of any loan made 
                                under this paragraph, including any 
                                interest accrued on such principal, 
                                shall immediately become due and 
                                payable to the State entity from which 
                                the loan originated.
                            ``(iv) No penalty for prepayment.--Any 
                        homeowner who receives a loan under this 
                        paragraph may repay the loan in full, without 
                        penalty, by lump sum or by installment 
                        payments, at any time prior to the loan 
                        becoming due and payable.
                            ``(v) Cap on loan amount.--The amount of 
                        any loan to any 1 homeowner under this section 
                        shall not exceed 20 percent of the original 
                        mortgage amount borrowed by the homeowner.
                            ``(vi) Subordination permitted.--Any loan 
                        made under this paragraph will be subordinated 
                        to any refinancing of the first mortgage, any 
                        preexisting subordinate financing, any purchase 
                        money mortgage, or subordinated for any other 
                        reason, as determined by the State.
                    ``(G) Existing loan funds.--Any State or State 
                housing finance agency with a previously existing fund 
                established to make loans to assist homeowners in 
                satisfying any amounts past due on their home loan may 
                use funds appropriated for purposes of this section for 
                that existing loan fund, even if the eligibility, 
                application, program, or use requirements for that loan 
                program differ from the eligibility, application, 
                program, and use requirements of this paragraph, unless 
                such use is expressly determined by the Secretary to be 
                inappropriate.'';
            (3) in subsection (f)(2)(A), by striking ``and rental 
        counselors.'' and inserting ``counselors in both pre-purchase 
        and post-purchase counseling and in training rental 
        counselors.''; and
            (4) by adding at the end the following:
    ``(g) Duty To Engage in Loss Mitigation.--
            ``(1) In general.--Upon default of any federally related 
        mortgage, as defined in section 3(1)(B) of the Real Estate 
        Settlement Procedures Act of 1974 (12 U.S.C. 2202(1)(B)), a 
        mortgagee shall engage in reasonable loss mitigation activities 
        for the purpose of providing an alternative to foreclosure.
            ``(2) Defense to foreclosure.--A mortgagee's failure to 
        comply with the requirements of paragraph (1) constitutes a 
        defense to the foreclosure.
            ``(3) No foreclosure if notice of application for home 
        preservation loan.--A mortgagee shall not initiate or continue 
        a foreclosure--
                    ``(A) upon receipt of a written confirmation that 
                the homeowner has applied for a home preservation loan 
                under subsection (d)(6); and
                    ``(B) for the period of 1 month after receipt of 
                such written confirmation or until the mortgagee is 
                informed, in writing, that the homeowner is not 
                eligible for a home preservation loan, whichever occurs 
                first.
            ``(4) Definition of loss mitigation activities.--
                    ``(A) In general.--As used in this subsection, the 
                term `loss mitigation activities' means activities that 
                minimize the potential losses to a homeowner or 
                investor that may result from--
                            ``(i) a homeowner's inability to pay the 
                        mortgage payments due on a home loan; and
                            ``(ii) any subsequent foreclosure action.
                    ``(B) Alternative to foreclosure.--Loss mitigation 
                activities provide alternatives to foreclosure whenever 
                possible and reasonably ensure the long-term 
                affordability of any mortgage retained pursuant to such 
                activities.
                    ``(C) Process of mitigation.--
                            ``(i) In general.--Loss mitigation 
                        activities involve reasonably analyzing the 
                        borrower's financial situation, evaluating the 
                        property value of the property to be mortgaged, 
                        and assessing the feasibility of measures 
                        including--
                                    ``(I) waiver of any late payment 
                                charge or, if applicable, penalty 
                                interest;
                                    ``(II) forbearance pursuant to a 
                                written agreement between the borrower 
                                and the servicer providing for a 
                                temporary reduction in monthly payments 
                                followed by a reamortization and new 
                                repayment schedule including the 
                                arrearage;
                                    ``(III) waiver, modification, or 
                                variation of any term of a mortgage, 
                                including modifications that change the 
                                mortgage rate, forgive the payment of 
                                principal or interest, extend the final 
                                maturity date of such mortgage, or 
                                begin to include an escrow for taxes 
                                and insurance;
                                    ``(IV) acceptance of payment from 
                                the homeowner of an amount less than 
                                the stated principal balance in final 
                                satisfaction of such mortgage;
                                    ``(V) assumption;
                                    ``(VI) pre-foreclosure sale; and
                                    ``(VII) deed in lieu of 
                                foreclosure.
                            ``(ii) Priority.--Activities described in 
                        subclauses (V), (VI), and (VII) shall only be 
                        pursued after a reasonable evaluation of the 
                        feasibility of activities described in 
                        subclause (I), (II), (III), and (IV), based 
                        upon the homeowner's circumstances.
    ``(h) Oversight of Public and Private Efforts To Reduce Mortgage 
Defaults and Foreclosures.--
            ``(1) Monitoring of home loans.--The Secretary, in 
        consultation with the Department of Housing and Urban 
        Development, the Office of the Comptroller of the Currency, the 
        Board of Governors of the Federal Reserve System, the Federal 
        Deposit Insurance Corporation, the National Credit Union 
        Administration, and the Office of Thrift Supervision, shall 
        develop and implement a plan to monitor--
                    ``(A) conditions and trends in the mortgage 
                industry in order to predict, as best as possible, 
                likely future trends in foreclosures; and
                    ``(B) the effectiveness of public efforts to reduce 
                mortgage defaults and foreclosures.
            ``(2) Annual report to congress on monitoring of home 
        loans.--Not later than 1 year after the development of the plan 
        under paragraph (1), and every year thereafter, the Secretary 
        shall submit a report to Congress that--
                    ``(A) summarizes and describes the findings of the 
                monitoring required under that subparagraph; and
                    ``(B) includes recommendations or proposals for 
                legislative or administrative action--
                            ``(i) to increase the authority of the 
                        Secretary to levy penalties against any 
                        mortgagee, or other person or entity, who fails 
                        to comply with the requirements described in 
                        this section; and
                            ``(ii) to improve coordination between 
                        various public and private initiatives to 
                        reduce the overall rate of mortgage defaults 
                        and foreclosures.
            ``(3) Compliance plan and report.--The Secretary, in 
        consultation with the Department of Housing and Urban 
        Development, the Office of the Comptroller of the Currency, the 
        Board of Governors of the Federal Reserve System, the Federal 
        Deposit Insurance Corporation, the National Credit Union 
        Administration, and the Office of Thrift Supervision, shall--
                    ``(A) develop a plan to monitor the compliance with 
                the requirements established in this section by 
                mortgagees and other persons or entities; and
                    ``(B) report such plan to Congress.
            ``(4) Development of a national database on defaults and 
        foreclosures.--
                    ``(A) In general.--The Secretary, in consultation 
                with the Department of Housing and Urban Development, 
                the Office of the Comptroller of the Currency, the 
                Board of Governors of the Federal Reserve System, the 
                Federal Deposit Insurance Corporation, the National 
                Credit Union Administration, and the Office of Thrift 
                Supervision, shall develop recommendations for a 
                national database on mortgage defaults and 
                foreclosures.
                    ``(B) Goals of national database.--In developing 
                the recommendations under subparagraph (A), the 
                Secretary shall consider the goals of such a national 
                database, which are as follows:
                            ``(i) To provide Federal regulatory 
                        agencies with information on--
                                    ``(I) mortgagees that generate home 
                                loans which go into default or 
                                foreclosure at a rate significantly 
                                higher than the national average for 
                                such mortgagees; and
                                    ``(II) the various factors 
                                associated with those higher rates.
                            ``(ii) To provide information to the 
                        Federal Government on loans, defaults, 
                        foreclosures, and sheriff sales--
                                    ``(I) which is not otherwise 
                                readily available;
                                    ``(II) which would allow for a 
                                better understanding of local, 
                                regional, and national trends in 
                                delinquencies, defaults, and 
                                foreclosures; and
                                    ``(III) so that public policies to 
                                reduce defaults and foreclosures may be 
                                improved.
                    ``(C) Report on outcomes of home loans.--
                            ``(i) In general.--In order to satisfy the 
                        requirement set forth in this paragraph and 
                        paragraph (1), the Secretary shall promulgate 
                        rules within 18 months of the date of enactment 
                        of the Homeownership Protection and Enhancement 
                        Act of 2007 requiring each lender who has 
                        originated 100 or more loans in the previous 
                        calendar year on behalf of itself or another 
                        person or entity, or each person or entity that 
                        has serviced 100 or more loans in the previous 
                        calendar year on behalf of itself or another 
                        entity, to report to the Secretary, on an 
                        annual basis, whatever data the Secretary, in 
                        consultation with the Department of Housing and 
                        Urban Development, the Office of the 
                        Comptroller of the Currency, the Board of 
                        Governors of the Federal Reserve System, the 
                        Federal Deposit Insurance Corporation, the 
                        National Credit Union Administration, and the 
                        Office of Thrift Supervision, deems sufficient 
                        to meet the requirements set forth in 
                        subparagraph (B).
                            ``(ii) Content of report.--At a minimum, 
                        each report required under clause (i) shall 
                        include data--
                                    ``(I) using the same identification 
                                requirements for each loan for which 
                                information is submitted as are 
                                established under the Home Mortgage 
                                Disclosure Act (12 U.S.C. 2801 et seq.) 
                                for data reporting, namely--
                                            ``(aa) year of origination;
                                            ``(bb) agency code of 
                                        originator;
                                            ``(cc) respondent 
                                        identification number of 
                                        originator; and
                                            ``(dd) the identifying 
                                        number for the loan;
                                    ``(II) regarding the 
                                characteristics of each home loan 
                                originated in the preceding 12 months 
                                by the lender, person, or entity, 
                                including--
                                            ``(aa) loan-to-value ratio 
                                        at the time of origination for 
                                        each mortgage on the property;
                                            ``(bb) whether or not there 
                                        is an escrow account for taxes 
                                        and insurance;
                                            ``(cc) the type of 
                                        mortgage, such as a fixed-rate 
                                        or adjustable-rate mortgage; 
                                        and
                                            ``(dd) any other loan or 
                                        loan underwriting 
                                        characteristics determined by 
                                        the Secretary, and the 
                                        regulators with whom the 
                                        Secretary consults under the 
                                        terms of subparagraph (C)(i), 
                                        to be necessary in order to 
                                        meet the requirements of 
                                        subparagraph (B) and that are 
                                        not already available to the 
                                        Secretary through a national 
                                        mortgage database;
                                    ``(III) regarding the performance 
                                outcomes of each home loan originated 
                                in the preceding 12 months by the 
                                lender, person, or entity, including--
                                            ``(aa) if such home loan 
                                        was in delinquency at any point 
                                        in such 12-month period; and
                                            ``(bb) if any foreclosure 
                                        proceeding was initiated on 
                                        such home loan during such 12-
                                        month period;
                                    ``(IV) sufficient to establish for 
                                each home loan that at any point during 
                                the preceding 12 months had become 60 
                                or more days delinquent with respect to 
                                a payment on any amount due under the 
                                home loan, or for which a foreclosure 
                                proceeding was initiated, the interest 
                                rate on such home loan at the time of 
                                such delinquency or foreclosure;
                                    ``(V) regarding foreclosures, 
                                including--
                                            ``(aa) the date of all 
                                        foreclosures initiated by the 
                                        lender, person, or entity; and
                                            ``(bb) the combined loan-
                                        to-value ratio of all mortgages 
                                        on a home at the time 
                                        foreclosure proceedings were 
                                        initiated; and
                                    ``(VI) indicating each home loan 
                                for which a foreclosure proceeding was 
                                completed in the preceding 12 months, 
                                including--
                                            ``(aa) foreclosure 
                                        proceedings initiated in such 
                                        12-month period; and
                                            ``(bb) the date of the 
                                        foreclosure completion.
                    ``(D) Requirement of federal financial institutions 
                examination council to create a consolidated 
                database.--The Federal Financial Institutions 
                Examination Council shall create a consolidated 
                database that establishes a connection between the data 
                provided under the Home Mortgage Disclosure Act (12 
                U.S.C. 2801 et seq.) and the data provided under this 
                subsection.
                    ``(E) Report to congress on national database.--Not 
                later than 12 months after the date of enactment of the 
                Homeownership Protection and Enhancement Act of 2007, 
                the Secretary shall report to Congress the 
                recommendations required under subparagraph (A).
    ``(i) Rule of Construction Regarding Mortgagees.--As used in this 
section--
            ``(1) the term `mortgagee'--
                    ``(A) means the original lender under a mortgage; 
                and
                    ``(B) includes--
                            ``(i) any servicers, affiliates, agents, 
                        subsidiaries, successors, or assignees of such 
                        lender; and
                            ``(ii) any subsequent purchaser, trustee, 
                        or transferee of any mortgage or credit 
                        instrument issued by such lender; and
            ``(2) the term `servicer' means any person who collects on 
        a home loan, whether they are the owner, the holder, the 
        assignee, the nominee for the loan, or the beneficiary of a 
        trust, or any person acting on behalf of such person.
    ``(j) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section--
            ``(1) $615,000,000 for fiscal year 2008, of which--
                    ``(A) $300,000,000 shall be for grants to 
                counseling organizations under subsection (c);
                    ``(B) $260,000,000 shall be for competitive grants 
                to States to establish revolving loan funds under 
                subsection (d)(6);
                    ``(C) $50,000,000 shall be for grants to establish 
                and operate State Homeownership Protection Centers 
                under subsection (d)(1); and
                    ``(D) $5,000,000 shall be to create the Federal 
                database under subsection (h)(4);
            ``(2) $635,000,000 for fiscal year 2009; and
            ``(3) such sums as necessary for each of fiscal years 2010 
        through 2012.''.
                                 <all>