1.This Act may be cited as
the Armed Forces Housing Security
Act
.
2.Increase in
maximum loan guaranty amount for certain housing loans guaranteed by the
Secretary of Veterans Affairs
(a)
(1)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)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 amountsSuch 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).
.
3.Improvement of
guarantee process for purchase of condominiumsThe 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.
4.Repeal of loan
funding fees for veterans housing loans
(a)Repeal of loan
funding fees requirement for housing loans
(1)Section 3729 of such title is repealed.
(2)
(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)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 fundThere
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.
5.Loan refinancing
for veterans in danger of mortgage default or foreclosure
(a)Decrease in
equity requirement for certain loansSubsection (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
DVASubsection (a)(8) of such section is amended by inserting
, whether or not
after an existing loan
.
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
protectionsSection 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)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)
(A)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)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 defaultNo 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 obligorsIn 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)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)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)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)In
this subsection:
(A)Covered member
of the armed forcesThe 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)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)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)This subsection shall take effect on the date of the
enactment of this Act.
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)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)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 harborExcept 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)In
this section:
(1)Covered member
of the armed forcesThe 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)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 planThe 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 loanThe term residential mortgage loan
means a loan that is secured by a lien on an owner-occupied residential
dwelling.
(5)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)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.
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)
(1)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 recipientFinancial services counseling shall be provided
under this section at no cost to the recipient.
(b)
(1)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)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)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 definedIn 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.