[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2136 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 2136

 To address the treatment of primary mortgages in bankruptcy, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 3, 2007

Mr. Durbin (for himself and Mr. Schumer) introduced the following bill; 
  which was read twice and referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
 To address the treatment of primary mortgages in bankruptcy, 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 ``Helping Families Save Their Homes in 
Bankruptcy Act of 2007''.

                    TITLE I--MINIMIZING FORECLOSURES

SEC. 101. SPECIAL RULES FOR MODIFICATION OF LOANS SECURED BY 
              RESIDENCES.

    (a) In General.--Section 1322(b) of title 11, United States Code, 
is amended--
            (1) in paragraph (10), by striking ``and'' at the end;
            (2) by redesignating paragraph (11) as paragraph (12); and
            (3) by inserting after paragraph (10) the following:
            ``(11) notwithstanding paragraph (2) and otherwise 
        applicable nonbankruptcy law--
                    ``(A) modify an allowed secured claim secured by 
                the debtor's principal residence, as described in 
                subparagraph (B), if, after deduction from the debtor's 
                current monthly income of the expenses permitted for 
                debtors described in section 1325(b)(3) of this title 
                (other than amounts contractually due to creditors 
                holding such allowed secured claims and additional 
                payments necessary to maintain possession of that 
                residence), the debtor has insufficient remaining 
                income to retain possession of the residence by curing 
                a default and maintaining payments while the case is 
                pending, as provided under paragraph (5); and
                    ``(B) provide for payment of such claim--
                            ``(i) for a period not to exceed 30 years 
                        (reduced by the period for which the loan has 
                        been outstanding) from the date of the order 
                        for relief under this chapter; and
                            ``(ii) at a rate of interest accruing after 
                        such date calculated at a fixed annual 
                        percentage rate, in an amount equal to the 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''.
    (b) Conforming Amendment.--Section 1325(a)(5) of title 11, United 
States Code, is amended by inserting before ``with respect'' the 
following: ``except as otherwise provided in section 1322(b)(11) of 
this title,''.

SEC. 102. WAIVER OF COUNSELING REQUIREMENT WHEN HOMES ARE IN 
              FORECLOSURE.

    Section 109(h) of title 11, United States Code, is amended by 
adding at the end the following:
    ``(5) Paragraph (1) shall not apply with respect to a debtor who 
files with the court a certification that a foreclosure sale of the 
debtor's principal residence has been scheduled.''.

              TITLE II--PROVIDING OTHER DEBTOR PROTECTIONS

SEC. 201. 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 ``; and''; and
            (3) by adding at the end the following:
            ``(3) to the extent that an allowed secured claim is 
        secured by the debtor's principal residence, the value of which 
        is greater than the amount of such claim, fees, costs, or 
        charges arising during the pendency of the case may be added to 
        secured debt provided for by the plan only if--
                    ``(A) notice of such fees, costs or charges is 
                filed with the court before the expiration of the 
                earlier of--
                            ``(i) 1 year after the time at which they 
                        are incurred; or
                            ``(ii) 60 days before the conclusion of the 
                        case; and
                    ``(B) such fees, costs, or charges are lawful, 
                reasonable, and provided for in the underlying 
                contract;
            ``(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) of this title or, 
        if the violation occurs before the date of discharge, of 
        section 362(a) of this title; and
            ``(5) a plan may provide for the waiver of any prepayment 
        penalty on a claim secured by the principal residence of the 
        debtor.''.

SEC. 202. MAINTAINING DEBTORS' LEGAL CLAIMS.

    Section 554(e) of title 11, United States Code, is amended by 
adding at the end the following:
    ``(e) In any action in State or Federal court with respect to a 
claim or defense asserted by an individual debtor in such action that 
was not scheduled under section 521(a)(1) of this title, the trustee 
shall be allowed a reasonable time to request joinder or substitution 
as the real party in interest. If the trustee does not request joinder 
or substitution in such action, the debtor may proceed as the real 
party in interest, and no such action shall be dismissed on the ground 
that it is not prosecuted in the name of the real party in interest or 
on the ground that the debtor's claims were not properly scheduled in a 
case under this title.''.

SEC. 203. RESOLVING DISPUTES.

    Section 1334 of title 28, United States Code, is amended by adding 
at the end the following: ``Notwithstanding any agreement for 
arbitration that is subject to chapter 1 of title 9, in any core 
proceeding under section 157(b) of this title involving an individual 
debtor whose debts are primarily consumer debts, the court may hear and 
determine the proceeding, and enter appropriate orders and judgments, 
in lieu of referral to arbitration.''.

SEC. 204. ENACTING A HOMESTEAD FLOOR FOR DEBTORS OVER 55 YEARS OF AGE.

    (a) In General.--Section 522(b)(3) of title 11, United States Code, 
is amended--
            (1) in subparagraph (B), by striking ``and'' at the end;
            (2) in subparagraph (C), by striking the period at the end 
        and inserting ``; and''; and
            (3) by adding at the end and inserting the following:
            ``(D) if the debtor, as of the date of the filing of the 
        petition, is 55 years old or older, the debtor's aggregate 
        interest, not to exceed $75,000 in value, in real property or 
        personal property that the debtor or a dependent of the debtor 
        uses as a principal residence, or in a cooperative that owns 
        property that the debtor or a dependent of the debtor uses as a 
        principal residence.''.
    (b) Exemption Authority.--Section 522(d)(1) of title 11, United 
States Code, is amended by inserting ``or, if the debtor is 55 years of 
age or older, $75,000 in value,'' before ``in real property''.

SEC. 205. DISALLOWING CLAIMS FROM VIOLATIONS OF CONSUMER PROTECTION 
              LAWS.

    Section 502(b) of title 11, United States Code, is amended--
            (1) in paragraph (8), by striking ``or'' at the end;
            (2) in paragraph (9), by striking the period at the end and 
        inserting ``; or''; and
            (3) by adding at the end the following:
            ``(10) the claim is subject to any remedy for damages or 
        rescission due to failure to comply with any applicable 
        requirement under the Truth in Lending Act (15 U.S.C. 1601 et 
        seq.), or any other provision of applicable State or Federal 
        consumer protection law that was in force when the 
        noncompliance took place, notwithstanding the prior entry of a 
        foreclosure judgment.''.
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