[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2791 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 2791

To address the foreclosure crisis and to revitalize neighborhoods, and 
                          for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

               April 1 (legislative day, March 13), 2008

 Mr. Voinovich introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To address the foreclosure crisis and to revitalize neighborhoods, 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 ``Protecting America's Homeowners Act 
of 2008''.

SEC. 2. DISCHARGE OF INDEBTEDNESS ON PRINCIPAL RESIDENCE EXCLUDED FROM 
              GROSS INCOME EXTENSION.

    Subparagraph (E) of section 108(a)(1) of the Internal Revenue Code 
of 1986 is amended by striking ``January 1, 2010'' and inserting 
``January 1, 2011''.

SEC. 3. TEMPORARY MORATORIUM OF PREPAYMENT PENALTIES FOR ALL MORTGAGE 
              PRODUCTS.

    (a) In General.--Notwithstanding any other provision of law, 
beginning on the date of enactment of this Act and ending on December 
31, 2009, the terms of any home mortgage loan that require that a 
consumer must pay a prepayment penalty for paying all or part of the 
outstanding principal on such loan before the date on which the 
principal is due under the terms of the loan agreement shall not be 
valid.
    (b) Definitions.--In this section, the following definitions shall 
apply:
            (1) Consumer; credit.--The terms ``consumer'' and 
        ``credit'' have the same meaning as in section 103 of the Truth 
        in Lending Act (15 U.S.C. 1602).
            (2) Home mortgage loan.--The term ``home mortgage loan'' 
        means any consumer credit transaction in which a security 
        interest, including any such interest arising by operation of 
        law, is or will be retained or acquired in any real property 
        located within the United States which is or, upon the 
        completion of the transaction, will be used as the principle 
        residence of the consumer.

SEC. 4. ASSISTANCE FOR MORTGAGE FORECLOSURE COUNSELING.

    (a) Expeditious Distribution of Funds Already Provided.--Upon 
certification by the Neighborhood Reinvestment Corporation under 
paragraph (4) under the second undesignated paragraph (beginning with 
the phrase ``For an additional amount'') under the heading 
``Neighborhood Reinvestment Corporation--Payment to the Neighborhood 
Reinvestment Corporation'' of Public Law 110-161 that Housing and Urban 
Development or Neighborhood Reinvestment Corporation-approved 
counseling intermediaries and State Housing Finance Agencies have the 
need for additional portions of the $180,000,000 provided therein for 
mortgage foreclosure mitigation activities in States and areas with 
high rates of mortgage foreclosures, defaults, or related activities 
beyond the initial awards, and the expertise to use such funds 
effectively, the Neighborhood Reinvestment Corporation shall 
expeditiously continue to award such funds as need and expertise is 
shown.
    (b) Additional Funding.--There are appropriated out of any money in 
the Treasury not otherwise appropriated for the fiscal year 2008, for 
an additional amount for the ``Neighborhood Reinvestment Corporation--
Payment to the Neighborhood Reinvestment Corporation'' $200,000,000, to 
remain available until expended, for foreclosure mitigation activities 
under the terms and conditions contained in the second undesignated 
paragraph (beginning with the phrase ``For an additional amount'') 
under the heading ``Neighborhood Reinvestment Corporation--Payment to 
the Neighborhood Reinvestment Corporation'' of Public Law 110-161.

SEC. 5. ASSISTANCE FOR THE REDEVELOPMENT OF ABANDONED AND FORECLOSED 
              HOMES.

    (a) Direct Appropriations.--There are appropriated out of any money 
in the Treasury not otherwise appropriated for the fiscal year 2008, 
$1,000,000,000, to remain available until expended, for assistance to 
States and units of general local government (as such terms are defined 
in section 102 of the Housing and Community Development Act of 1974 (42 
U.S.C. 5302)) for the redevelopment of abandoned and foreclosed homes.
    (b) Allocation of Appropriated Amounts.--
            (1) In general.--The amounts appropriated or otherwise made 
        available to States and units of general local government under 
        this section shall be allocated based on a funding formula 
        established by the Secretary of Housing and Urban Development.
            (2) Formula to be devised swiftly.--The funding formula 
        required under paragraph (1) shall be established not later 
        than 60 days after the date of enactment of this Act.
            (3) Criteria.--The funding formula required under paragraph 
        (1) shall ensure that any amounts appropriated or otherwise 
        made available under this section are allocated to States and 
        units of general local government with the greatest need, as 
        such need is determined in the discretion of the Secretary of 
        Housing and Urban Development based on the following factors:
                    (A) The number and percentage of home foreclosures 
                in each State or unit of general local government.
                    (B) The number and percentage of abandoned homes in 
                each State or unit of general local government.
            (4) Distribution.--Amounts appropriated or otherwise made 
        available to States and units of general local government under 
        this section shall be distributed according to the funding 
        formula required under paragraph (1) not later than 30 days 
        after the establishment of such formula.
    (c) Use of Funds.--
            (1) In general.--Any State or unit of general local 
        government that receives amounts pursuant to this section 
        shall, not later than 18 months after the receipt of such 
        amounts, use such amounts to redevelop abandoned and foreclosed 
        homes.
            (2) Priority.--Any State or unit of general local 
        government that receives amounts pursuant to this section shall 
        in distributing such amounts give priority emphasis and 
        consideration to those metropolitan areas, metropolitan cities, 
        urban areas, rural areas, low- and moderate-income areas, and 
        other areas with the greatest need, including those with the 
        greatest percentage of abandoned and foreclosed homes.
            (3) Eligible uses.--
                    (A) In general.--Amounts made available under this 
                section may be used to--
                            (i) make grants, loans, and other financing 
                        mechanisms to community development financial 
                        institutions (as such term is defined under 
                        section 103(5) of the Community Development 
                        Banking and Financial Institutions Act of 1994 
                        (12 U.S.C. 4702(5))), national intermediaries, 
                        and nonprofit housing or community development 
                        organizations and others to purchase and 
                        rehabilitate homes that have been abandoned or 
                        foreclosed upon, in order to sell, rent, or 
                        redevelop such homes;
                            (ii) establish financing mechanisms for 
                        redevelopment of foreclosed upon homes, 
                        including such mechanisms as soft-seconds, loan 
                        loss reserves, and shared-equity loans for low- 
                        and moderate-income homebuyers;
                            (iii) purchase and rehabilitate homes that 
                        have been abandoned or foreclosed upon, in 
                        order to sell, rent, or redevelop such homes;
                            (iv) establish land banks for homes that 
                        have been foreclosed upon; and
                            (v) demolish blighted structures.
                    (B) Limitation.--Any funds used under this section 
                for the purchase of an abandoned or foreclosed upon 
                home shall be at a discount from cost equal to or less 
                than the current market appraised value of the home, 
                taking into account its current condition, and such 
                discount appraisal shall ensure that purchasers are 
                paying below-market value for the homes as part of a 
                broader neighborhood stabilization strategy.
    (d) Rule of Construction.--Amounts appropriated or otherwise made 
available to States and units of general local government under this 
section shall be treated as though such funds were community 
development block grant funds under title I of the Housing and 
Community Development Act of 1974.
    (e) Waiver Authority.--In administering any amounts appropriated or 
otherwise made available under this section, the Secretary of Housing 
and Urban Development may waive, or specify alternative requirements 
for, any provision of any statute or regulation that the Secretary 
administers in connection with the obligation by the Secretary or the 
use by the recipient of such funds (except for requirements related to 
fair housing, nondiscrimination, labor standards, and the environment), 
in order to expedite or facilitate the use of such funds.
    (f) Periodic Audits.--In consultation with the Secretary of Housing 
and Urban Development, the Comptroller General of the United States 
shall conduct periodic audits to ensure that funds appropriated, made 
available, or otherwise distributed under this title are being used in 
a manner consistent with the criteria provided in this title.
    (g) Across-the-Board Rescissions in Non-Defense, Non-Homeland-
Security Discretionary Spending for Fiscal Year 2009.--
            (1) Across-the-board rescissions.--There is hereby 
        rescinded an amount equal to 0.25 percent of--
                    (A) the budget authority provided (or obligation 
                limitation imposed) for fiscal year 2009 for any non-
                defense, non-homeland-security discretionary account in 
                any fiscal year 2009 appropriation Act;
                    (B) the budget authority provided in any advance 
                appropriation for fiscal year 2009 for any non-defense, 
                non-homeland-security discretionary account in any 
                prior fiscal year appropriation Act; and
                    (C) the contract authority provided in fiscal year 
                2009 for any program that is subject to a limitation 
                contained in any fiscal year 2009 appropriation Act for 
                any non-defense, non-homeland-security discretionary 
                account.
            (2) Non-defense, non-homeland-security discretionary 
        account.--For purposes of paragraph (1), the term ``non-
        defense, non-homeland security discretionary account'' means 
        any discretionary account, other than--
                    (A) any account included in a Department of Defense 
                Appropriations Act;
                    (B) any account included in a Department of 
                Homeland Security Appropriations Act;
                    (C) any account of the Department of Defense 
                included in a Military Quality of Life and Veterans 
                Affairs Appropriations Act; or
                    (D) any account for Department of Energy defense 
                activities included in an Energy and Water Development 
                Appropriations Act.
            (3) Proportionate application.--Any rescission made by 
        paragraph (1) shall be applied proportionately--
                    (A) to each discretionary account and each item of 
                budget authority described in such paragraph; and
                    (B) within each such account and item, to each 
                program, project, and activity (with programs, 
                projects, and activities as delineated in the 
                appropriation Act or accompanying reports for the 
                relevant fiscal year covering such account or item, or 
                for accounts and items not included in appropriation 
                Acts, as delineated in the most recently submitted 
                President's budget).
            (4) Subsequent appropriation laws.--In the case of any 
        fiscal year 2009 appropriation Act enacted after the enactment 
        of this subsection, any rescission required by paragraph (1) 
        shall take effect immediately after the enactment of such Act.

SEC. 6. ENHANCED MORTGAGE LOAN DISCLOSURES.

    (a) In General.--The Truth In Lending Act (15 U.S.C. 1601 et seq.) 
is amended by inserting after section 129 the following new section:

``SEC. 129A. ENHANCED MORTGAGE LOAN DISCLOSURES.

    ``(a) Definitions.--As used in this section, the term `home 
mortgage loan' means any consumer credit transaction in which a 
security interest is or will be retained or acquired in any real 
property located in the United States which is or, upon completion of 
the transaction, will be used as the principle residence of the 
consumer.
    ``(b) Disclosures for Mortgage Loans.--
            ``(1) In general.--Subject to the rules of the Board, with 
        respect to a home mortgage loan, the creditor shall disclose to 
        the consumer, in addition to any other disclosures required 
        under this title, a good faith estimate of--
                    ``(A) the amount of the loan;
                    ``(B) the term of the loan;
                    ``(C) the annual percentage rate of interest for 
                the loan if such rate is fixed;
                    ``(D) the annual percentage rate of interest for 
                the loan if such rate is variable, provided that for 
                such a variable rate the creditor also discloses--
                            ``(i) the initial interest rate;
                            ``(ii) the duration of the initial interest 
                        rate;
                            ``(iii) the date on which the interest rate 
                        will be adjusted or reset;
                            ``(iv) the fully indexed rate (expressed as 
                        an estimate of the interest rate after it is 
                        adjusted or reset); and
                            ``(v) an estimate of the maximum possible 
                        applicable annual percentage rate of interest, 
                        including language expressing that if there is 
                        no maximum rate, the applicable State usury 
                        rate shall be disclosed;
                    ``(E) any prepayment fees or penalties that may be 
                imposed with respect to the loan, including--
                            ``(i) the amount of such fee or penalty; 
                        and
                            ``(ii) a brief description, in plain 
                        English, of the circumstances or events which 
                        would trigger the imposition of the prepayment 
                        fee or penalty;
                    ``(F) any balloon payment that may be required with 
                respect to the loan, including--
                            ``(i) the date on which the balloon payment 
                        is due, and the estimated amount of the balloon 
                        payment; and
                            ``(ii) a brief statement, in plain English, 
                        that a balloon payment mortgage does not fully 
                        pay off the loan, that a large balloon payment 
                        of the remaining principal will be required at 
                        the end of the loan term, and that many 
                        borrowers must secure another loan to make the 
                        balloon payment;
                    ``(G) whether or not the creditor automatically 
                provides for the escrow of taxes and insurance; and
                    ``(H) the total settlement costs, including if the 
                consumer shall be required to maintain private mortgage 
                insurance or take out a subordinate lien mortgage or 
                deed of trust (also referred to as a `piggyback loan') 
                on the real property securing the loan to cover the 
                cost of acquiring the property.
            ``(2) Range for estimate.--The disclosure required under 
        paragraph (1)(H) of the good faith estimate of the total 
        settlement costs of a home mortgage loan shall indicate whether 
        such estimated costs are or are not guaranteed to come within 
        10 percent of the actual final settlement costs related to the 
        loan, subject to approval of such terms by the consumer and the 
        appraisal of the real property securing the loan.
    ``(c) Timing of Disclosures.--The disclosures required by this 
section shall be provided to the consumer at the time of approval of 
the home mortgage loan, but in no case later than 7 days before the 
date on which the home mortgage loan is consummated.
    ``(d) Format.--The disclosures required by this section shall be 
presented to the consumer--
            ``(1) in plain English;
            ``(2) to the extent possible, as a 1-page, single document; 
        and
            ``(3) when provided in conjunction with or at the same time 
        as other required written disclosures, as the first of such 
        documents.
    ``(e) Tolerances for Accuracy.--The provisions of section 106(f), 
relating to tolerances for accuracy, and any rules of the Board issued 
under that subsection, shall apply to disclosures required under this 
section.''.
    (b) Amendment to Real Estate Settlement Procedures.--Section 4 of 
the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2603) is 
amended by adding at the end the following:
    ``(c) Truth in Lending Act Disclosures.--The form required under 
section 129A of the Truth in Lending Act shall be provided to the 
borrower at the time of settlement by the person conducting the 
settlement, in addition to any other disclosures required by this Act. 
In no case may a federally related mortgage loan be consummated if such 
form has not been provided to the borrower, both at the time of the 
approval of the loan, in accordance with that section 129A, and at 
settlement.''.

SEC. 7. CALCULATION OF FINANCE CHARGE AND APR.

    (a) Calculation of Finance Charge.--Section 106 of the Truth in 
Lending Act (15 U.S.C. 1605) is amended--
            (1) in subsection (a), by adding at the end of the last 
        sentence the following:
                    ``(F) Settlement costs.'';
            (2) by striking subsection (e); and
            (3) by redesignating subsection (f) as subsection (e).
    (b) Calculation of APR.--Section 107 of the Truth in Lending Act 
(15 U.S.C. 1606) is amending by adding at the end the following:
    ``(f) Extensions of Credit Secured by an Interest in Real 
Property.--In the case of any extension of credit secured by an 
interest in real property, the annual percentage rate applicable to 
such extension of credit shall include any settlement costs applicable 
in the determination of the finance charge in connection with such 
extension of credit.''.

SEC. 8. REGISTRATION OF GSES UNDER SECURITIES LAWS.

    (a) Fannie Mae.--
            (1) Mortgage-backed securities.--Section 304(d) of the 
        Federal National Mortgage Association Charter Act (12 U.S.C. 
        1719(d)) is amended by striking the fourth sentence and 
        inserting the following: ``Securities issued by the corporation 
        under this subsection shall not be exempt securities for 
        purposes of the Securities Act of 1933.''.
            (2) Subordinate obligations.--Section 304(e) of the Federal 
        National Mortgage Association Charter Act (12 U.S.C. 1719(e)) 
        is amended by striking the fourth sentence and inserting the 
        following: ``Obligations issued by the corporation under this 
        subsection shall not be exempt securities for purposes of the 
        Securities Act of 1933.''.
            (3) Securities.--Section 311 of the Federal National 
        Mortgage Association Charter Act (12 U.S.C. 1723c) is amended--
                    (A) in the section heading, by striking 
                ``association'';
                    (B) by inserting ``(a) In General.--'' after ``sec. 
                311.'';
                    (C) in the second sentence, by inserting ``by the 
                Association'' after ``issued''; and
                    (D) by adding at the end the following:
    ``(b) Treatment of Corporation Securities.--
            ``(1) In general.--Any stock, obligations, securities, 
        participations, or other instruments issued or guaranteed by 
        the corporation pursuant to this title shall not be exempt 
        securities for purposes of the Securities Act of 1933.
            ``(2) Exemption for approved sellers.--Notwithstanding any 
        other provision of this title or the Securities Act of 1933, 
        transactions involving the initial disposition by an approved 
        seller of pooled certificates that are acquired by that seller 
        from the corporation upon the initial issuance of the pooled 
        certificates shall be deemed to be transactions by a person 
        other than an issuer, underwriter, or dealer for purposes of 
        the Securities Act of 1933.
            ``(3) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Approved seller.--The term `approved seller' 
                means an institution approved by the corporation to 
                sell mortgage loans to the corporation in exchange for 
                pooled certificates.
                    ``(B) Pooled certificates.--The term `pooled 
                certificates' means single class mortgage-backed 
                securities guaranteed by the corporation that have been 
                issued by the corporation directly to the approved 
                seller in exchange for the mortgage loans underlying 
                such mortgage-backed securities.
            ``(4) Mortgage related securities.--A single class 
        mortgage-backed security guaranteed by the corporation that has 
        been issued by the corporation directly to the approved seller 
        in exchange for the mortgage loans underlying such mortgage-
        backed securities or directly by the corporation for cash shall 
        be deemed to be a mortgage related security, as defined in 
        section 3(a) of the Securities Exchange Act of 1934.''.
    (b) Freddie Mac.--Section 306(g) of the Federal Home Loan Mortgage 
Corporation Act (12 U.S.C. 1455(g)) is amended to read as follows:
    ``(g) Treatment of Securities.--
            ``(1) In general.--Any securities issued or guaranteed by 
        the Corporation shall not be exempt securities for purposes of 
        the Securities Act of 1933.
            ``(2) Exemption for approved sellers.--Notwithstanding any 
        other provision of this title or the Securities Act of 1933, 
        transactions involving the initial disposition by an approved 
        seller of pooled certificates that are acquired by that seller 
        from the Corporation upon the initial issuance of the pooled 
        certificates shall be deemed to be transactions by a person 
        other than an issuer, underwriter, or dealer for purposes of 
        the Securities Act of 1933.
            ``(3) Definitions.--For purposes of this subsection, the 
        following definitions shall apply:
                    ``(A) Approved seller.--The term `approved seller' 
                means an institution approved by the Corporation to 
                sell mortgage loans to the Corporation in exchange for 
                pooled certificates.
                    ``(B) Pooled certificates.--The term `pooled 
                certificates' means single class mortgage-backed 
                securities guaranteed by the Corporation that have been 
                issued by the Corporation directly to the approved 
                seller in exchange for the mortgage loans underlying 
                such mortgage-backed securities.''.
    (c) Limitation on Fees.--Section 6(b)(2) of the Securities Act of 
1933 (15 U.S.C. 77f(b)(2)) is amended by adding at the end the 
following: ``Notwithstanding any other provision of this title, no 
applicant, or group of affiliated applicants that does not include any 
investment company registered under the Investment Company Act of 1940, 
filing a registration statement subject to a fee shall be required in 
any fiscal year with respect to all registration statements filed by 
such applicant in such fiscal year to pay an aggregate amount in fees 
to the Commission pursuant to this subsection in an amount that exceeds 
5 percent of the target offsetting collection amount for such fiscal 
year. Fees paid in connection with registration statements relating to 
business combinations shall not be included in calculating the total 
fees paid by any such applicant.''.
    (d) No Effect on Other Law.--Nothing in this section or the 
amendments made by this section shall be construed to affect any 
exemption from the provisions of the Trust Indenture Act of 1939 
provided to the Federal National Mortgage Association or the Federal 
Home Loan Mortgage Corporation.
    (e) Regulations.--The Securities and Exchange Commission may issue 
such regulations as may be necessary or appropriate to carry out this 
section and the amendments made by this section.
    (f) Establishment of Financial Counseling and Foreclosure 
Prevention Fund.--
            (1) Establishment.--There is established in the Securities 
        and Exchange Commission a Financial Counseling and Foreclosure 
        Prevention Fund (in this subsection referred to as the 
        ``Fund''), which shall be used by the Commission to provide 
        assistance to the Neighborhood Reinvestment Corporation to make 
        grants to counseling intermediaries approved by the Department 
        of Housing and Urban Development or the Neighborhood 
        Reinvestment Corporation to provide mortgage foreclosure 
        mitigation assistance primarily to States and areas with high 
        rates of defaults and foreclosures, as authorized by the 
        Neighborhood Reinvestment Corporation Act (42 U.S.C. 8101-
        8107).
            (2) Deposits.--The Fund established under subsection (a) 
        shall consist of any registration fees paid by the Federal 
        National Mortgage Association or the Federal Home Loan Mortgage 
        Corporation to the Securities and Exchange Commission pursuant 
        to section 6 of the Securities Act of 1933 (15 U.S.C. 77f).
            (3) Management of fund.--The Fund shall be administered and 
        managed by the Securities and Exchange Commission, which shall 
        establish reasonable and prudent criteria for the management 
        and operation of any amounts in the Fund.
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