[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2992 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 2992

    To amend title 38, United States Code, to enhance housing loan 
 authorities for veterans and to otherwise assist veterans and members 
of the Armed Forces in avoiding the foreclosure of their homes, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 7, 2008

 Mr. Reid (for Mrs. Clinton (for herself and Mr. Schumer)) introduced 
the following bill; which was read twice and referred to the Committee 
                          on Veterans' Affairs

_______________________________________________________________________

                                 A BILL


 
    To amend title 38, United States Code, to enhance housing loan 
 authorities for veterans and to otherwise assist veterans and members 
of the Armed Forces in avoiding the foreclosure of their homes, 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 ``Armed Forces Housing Security Act''.

SEC. 2. INCREASE IN MAXIMUM LOAN GUARANTY AMOUNT FOR CERTAIN HOUSING 
              LOANS GUARANTEED BY THE SECRETARY OF VETERANS AFFAIRS.

    (a) Increase.--
            (1) In general.--Paragraph (1)(C) of section 3703(a) of 
        title 38, United States Code, is amended by striking ``25 
        percent of the Freddie Mac conforming loan limit'' and all that 
        follows and inserting ``25 percent of the higher of--
            ``(i) the limitation determined under section 305(a)(2) of 
        the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 
        1454(a)(2)) for the calendar year in which the loan is 
        originated for a single-family residence; or
            ``(ii) 125 percent of the area median price for a single-
        family residence, but in no case to exceed 175 percent of the 
        limitation determined under such section 305(a)(2) for the 
        calendar year in which the loan is originated for a single-
        family residence.''.
            (2) Applicability.--The amendment made by paragraph (1) 
        shall apply with respect to loans originated on or after the 
        date of the enactment of this Act.
    (b) Annual Increase in Home Loan Guaranty Amounts.--Such section is 
further amended by adding at the end the following new paragraph:
    ``(3) With respect to any fiscal year, the Secretary shall provide 
a percentage increase in the amounts guaranteed under paragraph (1) 
equal to the percentage by which--
            ``(A) the Consumer Price Index (all items, United States 
        city average) for the 12-month period ending on the June 30 
        preceding the beginning of the fiscal year for which the 
        increase is made, exceeds
            ``(B) such Consumer Price Index for the 12-month period 
        preceding the 12-month period described in subparagraph (A).''.

SEC. 3. IMPROVEMENT OF GUARANTEE PROCESS FOR PURCHASE OF CONDOMINIUMS.

    The Secretary of Veterans Affairs shall review and streamline the 
process of guaranteeing home loans under chapter 37 of title 38, United 
States Code, for the purchase of a condominium.

SEC. 4. REPEAL OF LOAN FUNDING FEES FOR VETERANS HOUSING LOANS.

    (a) Repeal of Loan Funding Fees Requirement for Housing Loans.--
            (1) In general.--Section 3729 of such title is repealed.
            (2) Conforming amendments.--
                    (A) Section 2041(b)(2) of such title is amended--
                            (i) in subparagraph (A), by adding ``and'' 
                        at the end;
                            (ii) in subparagraph (B), by striking ``; 
                        and'' and inserting a period; and
                            (iii) by striking subparagraph (C).
                    (B)(i) Section 3703 of such title is amended--
                            (I) by striking subsection (e); and
                            (II) by redesignating subsection (f) as 
                        subsection (e).
                    (ii) Section 3732(a)(1) of such title is amended by 
                striking ``Except as provided in section 3703(e) of 
                this title, if'' and inserting ``If''.
                    (C) Section 3722(c) of such title is amended by 
                striking ``section 3729 of this title or any other 
                provision of law or'' and inserting ``any provision of 
                law or any''.
                    (D) Section 3734(b)(2) of such title is amended--
                            (i) by striking subparagraph (A); and
                            (ii) by redesignating subparagraphs (B), 
                        (C), (D), and (E) as subparagraphs (A), (B), 
                        (C), and (D), respectively.
            (3) Clerical amendment.--The table of sections at the 
        beginning of chapter 37 of such title is amended by striking 
        the item relating to section 3729.
    (b) Authorization of Appropriations for Veterans Housing Benefit 
Program Fund.--There are authorized to be appropriated for the Veterans 
Housing Benefit Program Fund under section 3722 of title 38, United 
States Code, such sums as may be necessary to carry out the amendments 
made by this section.

SEC. 5. LOAN REFINANCING FOR VETERANS IN DANGER OF MORTGAGE DEFAULT OR 
              FORECLOSURE.

    (a) Decrease in Equity Requirement for Certain Loans.--Subsection 
(b)(8) of section 3710 of title 38, United States Code, is amended by 
striking ``90 percent'' and inserting ``100 percent''.
    (b) Authority for DVA Guarantee of Refinanced Loans Not Previously 
Guaranteed by DVA.--Subsection (a)(8) of such section is amended by 
inserting ``, whether or not'' after ``an existing loan''.

SEC. 6. ENHANCEMENT OF PROTECTIONS FOR MEMBERS OF THE ARMED FORCES AND 
              THEIR DEPENDENTS AGAINST SALE, FORECLOSURE, SEIZURE, OR 
              SALE OF MORTGAGED PROPERTY.

    (a) Extension of Period After Military Service Covered by General 
Protections.--Section 303(c) of the Servicemembers Civil Relief Act (50 
U.S.C. App. 533(c)) is amended by striking ``90 days'' and inserting 
``one year''.
    (b) Enhancement of Protections for Members of the Armed Forces Who 
Serve in Operation Iraqi Freedom or Operation Enduring Freedom and 
Their Dependents.--
            (1) Scope of protections.--This subsection applies to an 
        obligation on real or personal property owned by a covered 
        member of the Armed Forces, or by a dependent of a covered 
        member of the Armed Forces, regardless of whether entered into 
        before, on, or after the member's entry onto military service, 
        on which the covered member or dependent, as the case may be, 
        is still obligated and that is secured by a mortgage, trust 
        deed, or other security in the nature of a mortgage.
            (2) Sale or foreclosure.--
                    (A) In general.--A sale, foreclosure, or seizure of 
                property for breach of an obligation described in 
                paragraph (1) shall not be valid if made during, or 
                within one year after, the military service of a 
                covered member of the Armed Forces, or the military 
                service of the covered member of the Armed Forces 
                concerned in the case of a dependent of such a member.
                    (B) No waiver.--The limitations of subparagraph (A) 
                are not waiveable by a covered member of the Armed 
                Forces pursuant to section 107 of the Servicemembers 
                Civil Relief Act (50 U.S.C. App. 517).
            (3) Prohibition on actions for nonpayment or default.--No 
        court shall have jurisdiction to hear any civil action against 
        a covered member of the Armed Forces or a dependent of a 
        covered member of the Armed Forces for nonpayment or default on 
        an obligation described in paragraph (1) during, or within one 
        year after, the military service of the covered member or the 
        covered member Armed Forces concerned, as the case may be.
            (4) Responsibilities of obligors.--In the event a sale, 
        foreclosure, or seizure of property for breach of an obligation 
        described in paragraph (1) is prohibited by operation of 
        paragraph (2) or (3), the obligor on the obligation shall--
                    (A) notify the covered member of the Armed Forces 
                or dependent concerned, in writing, of the outstanding 
                liability of the covered member or dependent, as the 
                case may be, for principal and interest on the 
                obligation; and
                    (B) if the obligor determines that a modification 
                of the obligation or a reduction in the outstanding 
                liability of the covered member or dependent for 
                principal, interest, or both on the obligation is in 
                the interest of the obligor and the covered member or 
                dependent, as the case may be, notify the covered 
                member or dependent, as the case may be, in writing, 
                of--
                            (i) such determination; and
                            (ii) the actions to be taken by obligor and 
                        the covered member or dependent, as the case 
                        may be, to effectuate the modification or 
                        reduction.
            (5) Effect of protections on future financial 
        transactions.--
                    (A) Covered members.--The application of paragraph 
                (2), (3), (4), or (5) to an obligation described in 
                paragraph (1) of a covered member of the Armed Forces 
                shall be deemed to constitute the receipt by the 
                covered member of a stay of a civil liability with 
                respect to the obligation under the Servicemembers 
                Civil Relief Act for purposes of section 108 of that 
                Act (50 U.S.C. App. 518).
                    (B) Dependents.--In the event of the application of 
                paragraph (2), (3), (4), or (5) to an obligation 
                described in paragraph (1) of a dependent of a covered 
                member of the Armed Forces, the dependent shall be 
                deemed to be a servicemember receiving a stay of a 
                civil liability with respect to the obligation under 
                the Servicemembers Civil Relief Act for purposes of 
                section 108 of that Act.
            (6) Penalties.--The provisions of section 303(d) of the 
        Servicemembers Civil Relief Act (50 U.S.C. 533(d)) shall apply 
        to sales, foreclosures, and seizures of property, and attempted 
        sales, foreclosures, and seizures of property, prohibited by 
        paragraph (2).
            (7) Definitions.--In this subsection:
                    (A) Covered member of the armed forces.--The term 
                ``covered member of the Armed Forces'' means a member 
                of the Armed Forces, including a member of a Reserve 
                component of the Armed Forces, who serves on active 
                duty in the Armed Forces--
                            (i) in Iraq as part of Operation Iraqi 
                        Freedom; or
                            (ii) in Afghanistan as part of Operation 
                        Enduring Freedom.
                    (B) Dependent.--The term ``dependent'', in the case 
                of a covered member of the Armed Forces, has the 
                meaning given that term in section 101(4) of the 
                Servicemembers Civil Relief Act (50 U.S.C. App. 
                511(4)).
                    (C) Military service.--The term ``military 
                service'', in the case of a covered member of the Armed 
                Forces, means service of the member on active duty in 
                the Armed Forces--
                            (i) in Iraq as part of Operation Iraqi 
                        Freedom; or
                            (ii) in Afghanistan as part of Operation 
                        Enduring Freedom.
            (8) Effective date.--This subsection shall take effect on 
        the date of the enactment of this Act.

SEC. 7. ENCOURAGEMENT OF QUALIFIED LOAN MODIFICATIONS AND WORKOUT PLANS 
              FOR MEMBERS OF THE ARMED FORCES WHO SERVE IN OPERATION 
              IRAQI FREEDOM OR OPERATION ENDURING FREEDOM AND THEIR 
              DEPENDENTS.

    (a) Safe Harbor.--Absent specific contractual provisions to the 
contrary, if a servicer of a residential mortgage loan enters into a 
qualified loan modification or workout plan with a covered member of 
the Armed Forces or the dependent of a covered member of the Armed 
Forces, the servicer shall not be liable to--
            (1) any person, based on that person's ownership of a 
        residential mortgage loan or any interest in a pool of 
        residential mortgage loans or in securities that distribute 
        payments out of the principal, interest, and other payments in 
        loans on the pool;
            (2) any person that insures any loan or any interest 
        referred to in paragraph (1) under any law or regulation of the 
        United States or any law or regulation of any State or 
        political subdivision of any State; or
            (3) any other person or institution that may have a 
        financial or commercial relationship or association with the 
        persons described in paragraphs (1) and (2).
    (b) Rule of Construction.--No provision of this section shall be 
construed as limiting the ability of a servicer to enter into loan 
modifications or workout plans other than qualified loan modification 
or workout plans.
    (c) Limitations on Safe Harbor.--Except for the provisions of 
subsection (a) that limit liability for efforts to pursue qualified 
loan modifications or workout plans, the provisions of this section 
shall not be construed to affect or limit any other liability, duty, or 
other fiduciary obligation of the servicer to the investors and holders 
of beneficial interests in the pooled loans to a securitization 
vehicle, as prescribed by any other specific contractual provision 
agreed upon, or any other liability, duty, or other fiduciary 
obligation set forth under any--
            (1) law or regulation of the United States;
            (2) law or regulation of any State or political subdivision 
        of any State; or
            (3) established and approved standards for best practices 
        of any industry or trade group.
    (d) Definitions.--In this section:
            (1) Covered member of the armed forces.--The term ``covered 
        member of the Armed Forces'' means a member of the Armed 
        Forces, including a member of a Reserve component of the Armed 
        Forces, who serves on active duty in the Armed Forces--
                    (A) in Iraq as part of Operation Iraqi Freedom; or
                    (B) in Afghanistan as part of Operation Enduring 
                Freedom.
            (2) Dependent.--The term ``dependent'', in the case of a 
        covered member of the Armed Forces, has the meaning given that 
        term in section 101(4) of the Servicemembers Civil Relief Act 
        (50 U.S.C. App. 511(4)).
            (3) Qualified loan modification or workout plan.--The term 
        ``qualified loan modification'' or ``workout plan'' means a 
        modification or plan that--
                    (A) is scheduled to remain in place until the 
                covered member of the Armed Forces or dependent 
                concerned sells or refinances the property, or for at 
                least 5 years from the date of adoption of the plan, 
                whichever is sooner;
                    (B) does not provide for a repayment schedule that 
                results in negative amortization at any time;
                    (C) does not require the covered member or 
                dependent to pay additional points and fees;
                    (D) materially improves the ability of the covered 
                member or dependent to--
                            (i) prevent foreclosure; and
                            (ii) resume a reasonable repayment 
                        schedule, as such schedule may be based on the 
                        total debt to income ratio of the covered 
                        member or dependent;
                    (E) would reasonably reduce the likelihood of 
                default of foreclosure during the life of the 
                modification or plan;
                    (F) may waive any prepayment penalties that 
                reasonably inhibited the covered member or dependent 
                from fulfilling his or her ability to pay down the 
                principal on such residential mortgage loan or maintain 
                regular payments on such residential mortgage loan, as 
                such regular payments may be defined by the terms of 
                the residential mortgage loan; and
                    (G) includes full and accurate disclosure to the 
                covered member of the terms of the modification or 
                workout plan, provided that such disclosures are 
                executed in easy to understand terms that demonstrate 
                how the covered member or dependent will benefit from 
                the new terms in such modification or workout plan as 
                compared with the terms and conditions of the previous 
                residential mortgage loan of the covered member or 
                dependent.
            (4) Residential mortgage loan.--The term ``residential 
        mortgage loan'' means a loan that is secured by a lien on an 
        owner-occupied residential dwelling.
            (5) Servicer.--The term ```servicer''' has the same meaning 
        as in section 6(i)(2) of the Real Estate Settlement Procedures 
        Act (12 U.S.C. 2605(i)(2)).
            (6) Securitization vehicle.--The term ``securitization 
        vehicle'' means a trust, corporation, partnership, limited 
        liability entity, special purpose entity, or other structure 
        that--
                    (A) is the issuer, or is created by the issuer, of 
                mortgage pass-through certificates, participation 
                certificates, mortgage-backed securities, or other 
                similar securities backed by a pool of assets that 
                includes residential mortgage loans; and
                    (B) holds such loans.

SEC. 8. FINANCIAL SERVICES COUNSELING ON MORTGAGES AND MORTGAGE 
              FORECLOSURES FOR MEMBERS OF THE ARMED FORCES WHO SERVE IN 
              OPERATION IRAQI FREEDOM OR OPERATION ENDURING FREEDOM, 
              VETERANS, AND THEIR DEPENDENTS.

    (a) Counseling Required.--
            (1) In general.--The Secretary of Defense, in coordination 
        with the Secretary of Veterans Affairs and the Secretary of 
        Housing and Urban Development, shall provide financial services 
        counseling relating to mortgages and mortgage foreclosures to a 
        veteran, covered member of the Armed Forces, or dependent of 
        such veteran or covered member, upon request of such 
        individual.
            (2) Provision at no cost to recipient.--Financial services 
        counseling shall be provided under this section at no cost to 
        the recipient.
    (b) Annual Outreach Plan.--
            (1) Plan required.--The Secretary of Defense shall, in 
        coordination with the Secretary of Veterans Affairs and the 
        Secretary of Housing and Urban Development, develop and 
        implement on an annual basis a plan for the provision of 
        outreach to veterans, covered members of the Armed Forces, and 
        their dependents on the financial services counseling available 
        under this section.
            (2) Elements.--Each plan under this subsection shall 
        include--
                    (A) efforts to identify veterans, covered members 
                of the Armed Forces, or dependents who are not 
                otherwise enrolled in or registered for financial 
                counseling services under other programs administered 
                by the Secretary of Defense or the Secretary of 
                Veterans Affairs; and
                    (B) provisions for informing veterans, covered 
                members of the Armed Forces, and their dependents about 
                loan modification programs, workout plans, foreclosure 
                prevention, and other financial counseling programs 
                available to them through the Department of Defense, 
                the Department of Veterans Affairs, the Department of 
                Housing and Urban Development, nonprofit organizations, 
                and other Federal, State, and local initiatives.
            (3) Consultation.--In developing each plan under this 
        subsection, the Secretary of Defense shall consult with, at a 
        minimum, the following:
                    (A) Directors or other responsible officials of 
                veterans service organizations.
                    (B) Representatives of other outreach programs for 
                veterans.
                    (C) Nonprofit organizations.
                    (D) Other appropriate Federal, State, or local 
                government agencies, individuals, or organizations.
    (c) Covered Member of the Armed Forces Defined.--In this section, 
the term ``covered member of the Armed Forces'' means a member of the 
Armed Forces, including a member of a Reserve component of the Armed 
Forces, who serves on active duty in the Armed Forces--
            (1) in Iraq as part of Operation Iraqi Freedom; or
            (2) in Afghanistan as part of Operation Enduring Freedom.
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