[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2888 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 2888

 To protect the property and security of homeowners who are subject to 
            foreclosure proceedings, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 17, 2008

 Mr. Kohl (for himself, Ms. Collins, and Mrs. Lincoln) introduced the 
 following bill; which was read twice and referred to the Committee on 
                  Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
 To protect the property and security of homeowners who are subject to 
            foreclosure proceedings, 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 ``Foreclosure Rescue Fraud Act of 
2008''.

SEC. 2. DEFINITIONS.

    In this title:
            (1) Commission.--The term ``Commission'' means the Federal 
        Trade Commission.
            (2) Foreclosure consultant.--The term ``foreclosure 
        consultant''--
                    (A) means a person who directly or indirectly makes 
                any solicitation, representation, or offer to a 
                homeowner facing foreclosure on residential real 
                property to perform, with or without compensation, or 
                who performs, with or without compensation, any service 
                that such person represents will prevent, postpone, or 
                reverse the effect of such foreclosure; and
                    (B) does not include--
                            (i) an attorney licensed to practice law in 
                        the State in which the property is located who 
                        has established an attorney-client relationship 
                        with the homeowner;
                            (ii) a person licensed as a real estate 
                        broker or salesperson in the State where the 
                        property is located, and such person engages in 
                        acts permitted under the licensure laws of such 
                        State;
                            (iii) a housing counseling agency approved 
                        by the Secretary;
                            (iv) a depository institution (as defined 
                        in section 3 of the Federal Deposit Insurance 
                        Act (12 U.S.C. 1813));
                            (v) a Federal credit union or a State 
                        credit union (as defined in section 101 of the 
                        Federal Credit Union Act (12 U.S.C. 1752)); or
                            (vi) an insurance company organized under 
                        the laws of any State.
            (3) Homeowner.--The term ``homeowner'', with respect to 
        residential real property for which an action to foreclose on 
        the mortgage or deed of trust on such real property is filed, 
        means the person holding record title to such property as of 
        the date on which such action is filed.
            (4) Loan servicer.--The term ``loan servicer'' has the same 
        meaning as the term ``servicer'' in section 6(i)(2) of the Real 
        Estate Settlement Procedures Act of 1974 (12 U.S.C. 
        2605(i)(2)).
            (5) Residential mortgage loan.--The term ``residential 
        mortgage loan'' means any loan primarily for personal, family, 
        or household use that is secured by a mortgage, deed of trust, 
        or other equivalent consensual security interest on a dwelling 
        (as defined in section 103(v) of the Truth in Lending Act (15 
        U.S.C. 1602)(v)) or residential real estate upon which is 
        constructed or intended to be constructed a dwelling (as so 
        defined).
            (6) Residential real property.--The term ``residential real 
        property'' has the meaning given the term ``dwelling'' in 
        section 103 of the Consumer Credit Protection Act (15 U.S.C. 
        1602).
            (7) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.

SEC. 3. MORTGAGE RESCUE FRAUD PROTECTION.

    (a) Limits on Foreclosure Consultants.--A foreclosure consultant 
may not--
            (1) claim, demand, charge, collect, or receive any 
        compensation from a homeowner for services performed by such 
        foreclosure consultant with respect to residential real 
        property until such foreclosure consultant has fully performed 
        each service that such foreclosure consultant contracted to 
        perform or represented would be performed with respect to such 
        residential real property;
            (2) hold any power of attorney from any homeowner, except 
        to inspect documents, as provided by applicable law;
            (3) receive any consideration from a third party in 
        connection with services rendered to a homeowner by such third 
        party with respect to the foreclosure of residential real 
        property, unless such consideration is fully disclosed to such 
        homeowner in writing before such services are rendered;
            (4) accept any wage assignment, any lien of any type on 
        real or personal property, or other security to secure the 
        payment of compensation with respect to services provided by 
        such foreclosure consultant in connection with the foreclosure 
        of residential real property; or
            (5) acquire any interest, directly or indirectly, in the 
        residence of a homeowner with whom the foreclosure consultant 
        has contracted.
    (b) Contract Requirements.--
            (1) Written contract required.--Notwithstanding any other 
        provision of law, a foreclosure consultant may not provide to a 
        homeowner a service related to the foreclosure of residential 
        real property--
                    (A) unless--
                            (i) a written contract for the purchase of 
                        such service has been signed and dated by the 
                        homeowner; and
                            (ii) such contract complies with the 
                        requirements described in paragraph (2); and
                    (B) before the end of the 3-business-day period 
                beginning on the date on which the contract is signed.
            (2) Terms and conditions of contract.--The requirements 
        described in this paragraph, with respect to a contract, are as 
        follows:
                    (A) The contract includes, in writing--
                            (i) a full and detailed description of the 
                        exact nature of the contract and the total 
                        amount and terms of compensation;
                            (ii) the name, physical address, phone 
                        number, email address, and facsimile number, if 
                        any, of the foreclosure consultant to whom a 
                        notice of cancellation can be mailed or sent 
                        under subsection (d); and
                            (iii) a conspicuous statement in at least 
                        12 point bold face type in immediate proximity 
                        to the space reserved for the homeowner's 
                        signature on the contract that reads as 
                        follows: ``You may cancel this contract without 
                        penalty or obligation at any time before 
                        midnight of the 3rd business day after the date 
                        on which you sign the contract. See the 
                        attached notice of cancellation form for an 
                        explanation of this right.''.
                    (B) The contract is written in the principal 
                language used by the homeowner.
                    (C) The contract is accompanied by the form 
                required by subsection (c)(2).
    (c) Right To Cancel Contract.--
            (1) In general.--With respect to a contract between a 
        homeowner and a foreclosure consultant regarding the 
        foreclosure on the residential real property of such homeowner, 
        such homeowner may cancel such contract without penalty or 
        obligation by mailing a notice of cancellation not later than 
        midnight of the 3rd business day after the date on which such 
        contract is executed or would become enforceable against the 
        parties to such contract.
            (2) Cancellation form and other information.--Each contract 
        described in paragraph (1) shall be accompanied by a form, in 
        duplicate, that--
                    (A) has the heading ``Notice of Cancellation'' in 
                boldface type; and
                    (B) contains in boldface type the following 
                statement:
            ``You may cancel this contract, without any penalty or 
        obligation, at any time before midnight of the 3rd day after 
        the date on which the contract is signed by you.
            ``To cancel this contract, mail or deliver a signed and 
        dated copy of this cancellation notice or any other equivalent 
        written notice to [insert name of foreclosure consultant] at 
        [insert address of foreclosure consultant] before midnight on 
        [insert date].
            ``I hereby cancel this transaction on [insert date] [insert 
        homeowner signature].''.
    (d) Waiver of Rights and Protections Prohibited.--
            (1) In general.--A waiver by a homeowner of any protection 
        provided by this section or any right of a homeowner under this 
        section--
                    (A) shall be treated as void; and
                    (B) may not be enforced by any Federal or State 
                court or by any person.
            (2) Attempt to obtain a waiver.--Any attempt by any person 
        to obtain a waiver from any homeowner of any protection 
        provided by this section or any right of the homeowner under 
        this section shall be treated as a violation of this section.
            (3) Contracts not in compliance.--Any contract that does 
        not comply with the applicable provisions of this title shall 
        be void and may not be enforceable by any party.

SEC. 4. WARNINGS TO HOMEOWNERS OF FORECLOSURE RESCUE SCAMS.

    (a) In General.--If a loan servicer finds that a homeowner has 
failed to make 2 consecutive payments on a residential mortgage loan 
and such loan is at risk of being foreclosed upon, the loan servicer 
shall notify such homeowner of the dangers of fraudulent activities 
associated with foreclosure.
    (b) Notice Requirements.--Each notice provided under subsection (a) 
shall--
            (1) be in writing;
            (2) be included with a mailing of account information;
            (3) have the heading ``Notice Required by Federal Law'' in 
        a 14-point boldface type in English and Spanish at the top of 
        such notice; and
            (4) contain the following statement in English and Spanish: 
        ``Mortgage foreclosure is a complex process. Some people may 
        approach you about saving your home. You should be careful 
        about any such promises. There are government and nonprofit 
        agencies you may contact for helpful information about the 
        foreclosure process. Contact your lender immediately at [____], 
        call the Department of Housing and Urban Development Housing 
        Counseling Line at (800) 569-4287 to find a housing counseling 
        agency certified by the Department to assist you in avoiding 
        foreclosure, or visit the Department's Tips for Avoiding 
        Foreclosure website at http://www.hud.gov/foreclosure for 
        additional assistance.'' (the blank space to be filled in by 
        the loan servicer).

SEC. 5. CIVIL LIABILITY.

    (a) Liability Established.--Any foreclosure consultant who fails to 
comply with any provision of section 3 or 4 with respect to any other 
person shall be liable to such person in an amount equal to the sum of 
the amounts determined under each of the following paragraphs:
            (1) Actual damages.--The greater of--
                    (A) the amount of any actual damage sustained by 
                such person as a result of such failure; or
                    (B) any amount paid by the person to the 
                foreclosure consultant.
            (2) Punitive damages.--In the case of any action by an 
        individual, such amount (in addition to damages described in 
        paragraph (1)) as the court may allow.
            (3) Attorneys' fees.--In the case of any successful action 
        to enforce any liability under paragraph (1) or (2), the costs 
        of the action, together with reasonable attorneys' fees.
    (b) Factors To Be Considered in Awarding Punitive Damages.--In 
determining the amount of any liability of any foreclosure consultant 
under subsection (a)(2), the court shall consider, among other relevant 
factors--
            (1) the frequency and persistence of noncompliance by the 
        foreclosure consultant;
            (2) the nature of the noncompliance; and
            (3) the extent to which such noncompliance was intentional.

SEC. 6. ADMINISTRATIVE ENFORCEMENT.

    (a) Enforcement by Federal Trade Commission.--
            (1) Unfair or deceptive act or practice.--A violation of a 
        prohibition described in section 3 or a failure to comply with 
        any provision of section 3 or 4 shall be treated as a violation 
        of a rule defining an unfair or deceptive act or practice 
        described under section 18(a)(1)(B) of the Federal Trade 
        Commission Act (15 U.S.C. 57a(a)(1)(B)).
            (2) Actions by the federal trade commission.--The Federal 
        Trade Commission shall enforce the provisions of sections 3 and 
        4 in the same manner, by the same means, and with the same 
        jurisdiction, powers, and duties as though all applicable terms 
        and provisions of the Federal Trade Commission Act (15 U.S.C. 
        41 et seq.) were incorporated into and made part of this title.
    (b) State Action for Violations.--
            (1) Authority of states.--In addition to such other 
        remedies as are provided under State law, whenever the chief 
        law enforcement officer of a State, or an official or agency 
        designated by a State, has reason to believe that any person 
        has violated or is violating the provisions of section 3 or 4, 
        the State--
                    (A) may bring an action to enjoin such violation;
                    (B) may bring an action on behalf of its residents 
                to recover damages for which the person is liable to 
                such residents under section 5 as a result of the 
                violation; and
                    (C) in the case of any successful action under 
                subparagraph (A) or (B), shall be awarded the costs of 
                the action and reasonable attorney fees, as determined 
                by the court.
            (2) Rights of federal trade commission.--
                    (A) Notice to commission.--The State shall serve 
                prior written notice of any civil action under 
                paragraph (1) upon the Commission and provide the 
                Commission with a copy of its complaint, except in any 
                case in which such prior notice is not feasible, in 
                which case the State shall serve such notice 
                immediately upon instituting such action.
                    (B) Intervention.--The Commission shall have the 
                right--
                            (i) to intervene in any action referred to 
                        in subparagraph (A);
                            (ii) upon so intervening, to be heard on 
                        all matters arising in the action; and
                            (iii) to file petitions for appeal in such 
                        actions.
            (3) Investigatory powers.--For purposes of bringing any 
        action under this subsection, nothing in this subsection shall 
        prevent the chief law enforcement officer, or an official or 
        agency designated by a State, from exercising the powers 
        conferred on the chief law enforcement officer or such official 
        by the laws of such State to conduct investigations or to 
        administer oaths or affirmations, or to compel the attendance 
        of witnesses or the production of documentary and other 
        evidence.
            (4) Limitation.--Whenever the Federal Trade Commission has 
        instituted a civil action for a violation of section 3 or 4, no 
        State may, during the pendency of such action, bring an action 
        under this section against any defendant named in the complaint 
        of the Commission for any violation of section 3 or 4 that is 
        alleged in that complaint.

SEC. 7. PREEMPTION.

    Nothing in this title affects any provision of State or local law 
respecting any foreclosure consultant, residential mortgage loan, or 
residential real property that provides equal or greater protection to 
homeowners than what is provided under this title.
                                 <all>