1.Short title and table of
contents
(a)This Act may be cited
as the Fairness in Housing Recovery
Act of 2009
.
(b)The table of contents for this Act is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Servicer safe harbor for mortgage loan
modifications.
Sec. 3. Replacement of HOPE for Homeowners Program with program
for insurance of homeownership retention mortgages.
Sec. 4. Expanding and preserving homeownership through
counseling.
Sec. 5. Requirements for FHA-approved mortgagees.
Sec. 6. Commission on the Foreclosure and Mortgage Lending
Crisis.
Sec. 7. Authorization of appropriations for combating mortgage
fraud.
Sec. 8. Enhancement of liquidity and stability of insured
depository institutions to ensure availability of credit and reduction of
foreclosures.
Sec. 9. Prohibition on the receipt of common stock and the
exercise of stock voting power.
Sec. 10. Treatment of gain on disposition of subsidized
residences.
Sec. 11. Refundable tax credit for residences purchased during
2009 or 2010.
Sec. 12. Conditions on mortgage relief.
2.Servicer safe harbor
for mortgage loan modifications
(a)
(1)Loan
modifications and workout plansNotwithstanding any other provision of law,
and notwithstanding any investment contract between a servicer and a
securitization vehicle or investor, a servicer that acts consistent with the
duty set forth in section 129A(a) of Truth in Lending Act (15 U.S.C. 1639a)
shall not be liable for entering into a loan modification, workout, or other
loss mitigation plan, including, but not limited to, disposition, including any
modification or refinancing undertaken pursuant to standard loan modification,
sale, or disposition guidelines issued by the Secretary of the Treasury or his
designee under the Emergency Economic Stabilization Act of 2008, with respect
to any such mortgage that meets all of the criteria set forth in paragraph
(2)(B) to—
(A)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;
(B)any person who is
obligated pursuant to a derivatives instrument to make payments determined in
reference to any loan or any interest referred to in subparagraph (A);
or
(C)any person that
insures any loan or any interest referred to in subparagraph (A) under any law
or regulation of the United States or any law or regulation of any State or
political subdivision of any State.
(2)Ability to
modify mortgages
(A)Notwithstanding
any other provision of law, and notwithstanding any investment contract between
a servicer and a securitization vehicle or investor, a servicer—
(i)shall not be
limited in the ability to modify mortgages, the number of mortgages that can be
modified, the frequency of loan modifications, or the range of permissible
modifications; and
(ii)shall not be
obligated to repurchase loans from or otherwise make payments to the
securitization vehicle on account of a modification, workout, or other loss
mitigation plan for a residential mortgage or a class of residential mortgages
that constitute a part or all of the mortgages in the securitization
vehicle,
if any mortgage so modified meets
all of the criteria set forth in subparagraph (B).(B)The
criteria under this subparagraph with respect to a mortgage are as
follows:
(i)Default on the
payment of such mortgage has occurred or is reasonably foreseeable.
(ii)The property
securing such mortgage is occupied by the mortgagor of such mortgage.
(iii)The servicer
reasonably and in good faith believes that the anticipated recovery on the
principal outstanding obligation of the mortgage under the particular
modification or workout plan or other loss mitigation action will exceed, on a
net present value basis, the anticipated recovery on the principal outstanding
obligation of the mortgage to be realized through foreclosure.
(3)This
subsection shall apply only with respect to modifications, workouts, and other
loss mitigation plans initiated before January 1, 2012.
(b)Each
servicer that engages in loan modifications or workout plans subject to the
safe harbor in subsection (a) shall report to the Secretary on a regular basis
regarding the extent, scope and results of the servicer’s modification
activities. The Secretary shall prescribe regulations specifying the form,
content, and timing of such reports.
(c)If an unsuccessful
action is brought against a servicer by any person described in subparagraph
(A), (B), or (C) of subsection (a)(1), such person shall bear any actual legal
costs of the servicer, including reasonable attorney fees and expert witness
fees, incurred in good faith in such action, as determined by the court.
(d)For
purposes of this section, the following definitions shall apply:
(1)The
term Secretary
means the Secretary of the Treasury.
(2)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
mortgages.
3.Replacement of
HOPE for Homeowners Program with program for insurance of homeownership
retention mortgages
(a)Title II of the
National Housing Act (12 U.S.C. 1707 et seq.) is amended—
(1)in section 257 (12 U.S.C. 1715z–23), as
added by section 1402(a) of Public Law 110–289—
(A)by striking
subsections (a) through (k); and
(B)by striking
subsections (n) through (v);
(2)by redesignating section 257 (12 U.S.C.
1715z–24), as added by section 2124 of Public Law 110–289, as section 259;
and
(3)by inserting
before such section 259 (as so redesignated) the following new section:
258.Insurance of
homeownership retention mortgages
(a)The Secretary shall, subject only to the
absence of qualified requests for insurance under this section and to the
limitations under sections 257(m) and 531(a), make commitments to insure and
insure any mortgage covering a 1- to 4-family residence that is made for the
purpose of paying or prepaying outstanding obligations under an existing
mortgage or mortgages on the residence if the mortgage being insured under this
section meets the requirements of this section, as established by the
Secretary. The Secretary shall establish such mortgage insurance products, and
requirements and standards, in accordance with this section as the Secretary
considers appropriate to carry out this section and shall prescribe such
regulations and provide such guidance as may be necessary or appropriate to
implement such products, requirements, and standards.
(b)Requirements of
insured mortgageTo be eligible for insurance under this section,
a mortgage to be insured under this section shall comply with all of the
following requirements:
(1)The mortgagor under
the mortgage to be insured shall provide documentation satisfactory in the
determination of the Secretary to prove that the residence covered by the
mortgage to be insured under this section is occupied by the mortgagor as the
primary residence of the mortgagor, and that such residence is the only
residence in which the mortgagor has any present ownership interest.
(2)The mortgagor under
the mortgage to be insured shall be the mortgagor under the existing mortgage
to be refinanced by the insured mortgage and shall—
(A)be in default on
the mortgagor’s obligations under the existing mortgage;
(B)be in danger of defaulting, as determined
in accordance with standards established by the Secretary, on the mortgagor’s
obligations under the existing mortgage; or
(C)have a remaining
principal obligation amount under such existing mortgage that exceeds, at the
time of the commitment for mortgage insurance under this section, the appraised
value of the property that is subject to such existing mortgage.
(3)Prohibition on
refinancing liar loansThe Secretary may not insure a mortgage
under this section if the mortgagor under such mortgage has knowingly, or
willfully and with actual knowledge, furnished any material information
regarding the income or financial worth of the mortgagor that is known to be
false for the purpose of obtaining the existing mortgage that is to be
refinanced by the mortgage to be insured under this section.
(4)Exclusion of
zero down payment loansIn
connection with the origination of the senior existing mortgage to be
refinanced with the mortgage insured under this section, the mortgagor shall
have made a down payment, in cash or its equivalent, on account of the property
purchased under such senior existing mortgage.
(5)Exclusion of
no-doc loansThe existing
senior mortgage to be refinanced with the mortgage insured under this section
shall have been originated only pursuant to the mortgagor providing
documentation sufficient to verify the amount and source of the mortgagor’s
income.
(6)Prohibition on
refinancing zero-down loans and loans with equity removedThe Secretary may not insure a mortgage
under this section if—
(A)under the existing mortgage to be
refinanced, the mortgagor did not make any payment on account of the property
(or any payment exceeding such nominal amount as the Secretary may establish),
in cash or its equivalent, in connection with acquisition of the property;
or
(B)during the term of
the existing mortgage to be refinanced, the mortgagor withdrew all, or
substantially all (in accordance with such standards and guidelines as the
Secretary shall establish) of any equity of the mortgagor in the property
subject to such existing mortgage.
(7)The
mortgage to be insured under this section shall have such terms and conditions
as the Secretary shall provide, except that such mortgage shall—
(A)have a term to
maturity not exceeding 40 years; and
(B)bear interest at
an annual rate that is fixed for the entire term of the mortgage.
(8)Required waiver
of prepayment penalties and feesAll penalties for prepayment or
refinancing of the existing mortgage, and all fees and penalties related to
default or delinquency on the existing mortgage, shall be waived or
forgiven.
(9)The Secretary
shall provide that, with respect to each mortgage insured under this section,
upon any sale or disposition of the property subject to such mortgage occurring
during the 5-year period beginning on the date of the insurance of the
mortgage, to the extent of any principal write-down or interest rate subsidy
provided in connection with the mortgage, the Secretary and the mortgagee shall
be entitled to a percentage of any appreciation in value of such property that
has occurred since the date that such mortgage was insured under this section,
which percentage shall decrease over time, and the mortgagor shall be entitled
to the remainder of any such appreciation.
(10)The principal obligation amount of the mortgage to be
insured under this section shall not exceed the applicable dollar amount
limitation in effect under section 305(a)(2) of the Federal Home Loan Mortgage
Corporation (12 U.S.C. 1452(a)(2)) for a property of the applicable size for
the area in which the property is located .
(11)The refinanced eligible mortgage to be insured shall—
(A)bear interest at a
single rate that is fixed for the entire term of the mortgage; and
(B)have a maturity of
not less than 30 years from the date of the beginning of amortization of such
refinanced eligible mortgage.
(c)The Secretary may
establish a fee, charge, or other mechanism for recovering, upon sale or other
disposition of the property that is subject to the mortgage insured under this
section or upon the subsequent refinancing of the mortgage, a portion of the
equity or appreciation in the property.
(d)In order to
facilitate favorable pricing for loans insured under this section, the Board of
Governors of the Federal Reserve System, the Secretary of the Treasury, the
Federal National Mortgage Association, and the Federal Home Loan Mortgage
Corporation are authorized to purchase mortgage-backed securities guaranteed by
the Government National Mortgage Association that are backed by loans
originated under this section or whole loans originated and purchased under
this section. The Government National Mortgage Association is authorized to
hold, sell, and securitize whole loans originated under this section.
(e)For
purposes of this section, the following definitions shall apply:
(1)The term
existing mortgage
means, with respect to a mortgage insured
under this section, a mortgage that is to be extinguished, and paid or prepaid,
from the proceeds of the mortgage insured under this section.
(2)The term senior existing mortgage
means,
with respect to a mortgage insured under this section, the existing mortgage
that has superior priority.
(f)The Secretary may not enter into any new
commitment to insure any refinanced eligible mortgage, or newly insure any
refinanced eligible mortgage pursuant to this section after the expiration of
the 3-year period beginning upon the date of the enactment of this
section.
.
(b)Use of aggregate
insurance authority and funds under HOPE for Homeowners
ProgramSection 257 of the National Housing Act (12 U.S.C.
1715z–24), as added by section 1402(a) of Public Law 110–289), is
amended—
(1)in subsection
(l)(1), by striking this section
and inserting section
258
;
(2)in subsection (m),
by striking this section
and inserting section
258
;
(3)in subsection
(w)—
(A)in paragraphs (1)
and (3), by striking HOPE for Homeowners Program
each place such
term appears and inserting mortgage insurance program under section
258
; and
(B)in paragraph (4) by striking HOPE
for Homeowners Program in accordance with subsections (i) and (k)
and
inserting mortgage insurance program under section 258
;
(4)by redesignating
subsections (l), (m), and (w) as subsections (a), (b), and (c), respectively;
and
(5)by striking the
section heading and inserting the following: HOPE Fund and HOPE
bonds.
(c)Reducing TARP
funds To offset costs of programParagraph (3) of section 115(a) of the
Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5225) is amended by
inserting “, as such amount is reduced by $1,000,000,000,” after
“$700,000,000,000”.
4.Expanding and
preserving homeownership through counseling
(a)Establishment of
Office of Housing CounselingSection 4 of the Department of
Housing and Urban Development Act (42
U.S.C. 3533) is amended by adding at the end the following new
subsection:
(g)Office of
Housing Counseling
(1)There
is established, in the Office of the Secretary, the Office of Housing
Counseling.
(2)There
is established the position of Director of Housing Counseling. The Director
shall be the head of the Office of Housing Counseling and shall be appointed by
the Secretary. Such position shall be a career-reserved position in the Senior
Executive Service.
(3)
(A)The Director shall have ultimate responsibility within
the Department, except for the Secretary, for all activities and matters
relating to homeownership counseling and rental housing counseling,
including—
(i)research, grant
administration, public outreach, and policy development relating to such
counseling; and
(ii)establishment,
coordination, and administration of all regulations, requirements, standards,
and performance measures under programs and laws administered by the Department
that relate to housing counseling, homeownership counseling (including
maintenance of homes), mortgage-related counseling (including home equity
conversion mortgages and credit protection options to avoid foreclosure), and
rental housing counseling, including the requirements, standards, and
performance measures relating to housing counseling.
(B)The Director shall
carry out the functions assigned to the Director and the Office under this
section and any other provisions of law. Such functions shall include
establishing rules necessary for—
(i)the counseling
procedures under section 106(g)(1) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(h)(1));
(ii)carrying out all
other functions of the Secretary under section 106(g) of the
Housing and Urban Development Act of
1968, including the establishment, operation, and publication of the
availability of the toll-free telephone number under paragraph (2) of such
section;
(iii)carrying out
section 5 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2604)
for home buying information booklets prepared pursuant to such section;
(iv)carrying out the
certification program under section 106(e) of the
Housing and Urban Development Act of
1968 (12 U.S.C. 1701x(e));
(v)carrying out the
assistance program under section 106(a)(4) of the
Housing and Urban Development Act of
1968, including criteria for selection of applications to receive
assistance;
(vi)carrying out any
functions regarding abusive, deceptive, or unscrupulous lending practices
relating to residential mortgage loans that the Secretary considers
appropriate, which shall include conducting the study under section 4(e) of the
Fairness in Housing Recovery Act of
2009;
(vii)providing for
operation of the advisory committee established under paragraph (4) of this
subsection;
(viii)collaborating
with community-based organizations with expertise in the field of housing
counseling; and
(ix)providing for the building of capacity to
provide housing counseling services in areas that lack sufficient
services.
(4)
(A)The Secretary shall appoint an advisory committee to
provide advice regarding the carrying out of the functions of the
Director.
(B)Such
advisory committee shall consist of not more than 12 individuals, and the
membership of the committee shall equally represent all aspects of the mortgage
and real estate industry, including consumers.
(C)Except
as provided in subparagraph (D), each member of the advisory committee shall be
appointed for a term of 3 years. Members may be reappointed at the discretion
of the Secretary.
(D)Terms of initial
appointeesAs designated by the Secretary at the time of
appointment, of the members first appointed to the advisory committee, 4 shall
be appointed for a term of 1 year and 4 shall be appointed for a term of 2
years.
(E)Prohibition of
pay; travel expensesMembers of the advisory committee shall
serve without pay, but shall receive travel expenses, including per diem in
lieu of subsistence, in accordance with applicable provisions under subchapter
I of chapter 57 of title 5, United States Code.
(F)The advisory committee shall have no role in reviewing or
awarding housing counseling grants.
(5)Scope of
homeownership counselingIn carrying out the responsibilities of
the Director, the Director shall ensure that homeownership counseling provided
by, in connection with, or pursuant to any function, activity, or program of
the Department addresses the entire process of homeownership, including the
decision to purchase a home, the selection and purchase of a home, issues
arising during or affecting the period of ownership of a home (including
refinancing, default and foreclosure, and other financial decisions), and the
sale or other disposition of a
home.
.
(b)
(1)Section 106 of the Housing
and Urban Development Act of 1968 (12 U.S.C. 1701x) is amended by
adding at the end the following new subsection:
(g)Procedures and
activities
(1)
(A)The Secretary shall establish, coordinate, and monitor
the administration by the Department of Housing and Urban Development of the
counseling procedures for homeownership counseling and rental housing
counseling provided in connection with any program of the Department, including
all requirements, standards, and performance measures that relate to
homeownership and rental housing counseling.
(B)For purposes of this subsection and as used in the
provisions referred to in this subparagraph, the term homeownership
counseling means counseling related to homeownership and residential
mortgage loans. Such term includes counseling related to homeownership and
residential mortgage loans that is provided pursuant to—
(i)section 105(a)(20)
of the Housing and Community Development Act of
1974 (42 U.S.C. 5305(a)(20));
(ii)in the
United States Housing Act of
1937—
(I)section 9(e) (42
U.S.C. 1437g(e));
(II)section
8(y)(1)(D) (42 U.S.C. 1437f(y)(1)(D));
(III)section
18(a)(4)(D) (42 U.S.C. 1437p(a)(4)(D));
(IV)section 23(c)(4)
(42 U.S.C. 1437u(c)(4));
(V)section 32(e)(4)
(42 U.S.C. 1437z–4(e)(4));
(VI)section
33(d)(2)(B) (42 U.S.C. 1437z–5(d)(2)(B));
(VII)sections
302(b)(6) and 303(b)(7) (42 U.S.C. 1437aaa–1(b)(6), 1437aaa–2(b)(7));
and
(VIII)section
304(c)(4) (42 U.S.C. 1437aaa–3(c)(4));
(iii)section
302(a)(4) of the American Homeownership and Economic Opportunity Act of 2000
(42 U.S.C. 1437f note);
(iv)sections
233(b)(2) and 258(b) of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C. 12773(b)(2),
12808(b));
(v)this section and
section 101(e) of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701x, 1701w(e));
(vi)section
220(d)(2)(G) of the Low-Income Housing Preservation and Resident Homeownership
Act of 1990 (12 U.S.C. 4110(d)(2)(G));
(vii)sections
422(b)(6), 423(b)(7), 424(c)(4), 442(b)(6), and 443(b)(6) of the
Cranston-Gonzalez National Affordable Housing
Act (42 U.S.C. 12872(b)(6), 12873(b)(7), 12874(c)(4), 12892(b)(6),
and 12893(b)(6));
(viii)section
491(b)(1)(F)(iii) of the McKinney-Vento Homeless Assistance Act (42 U.S.C.
11408(b)(1)(F)(iii));
(ix)sections 202(3)
and 810(b)(2)(A) of the Native American Housing and Self-Determination Act of
1996 (25 U.S.C. 4132(3), 4229(b)(2)(A));
(x)in
the National Housing Act—
(I)in section 203 (12
U.S.C. 1709), the penultimate undesignated paragraph of paragraph (2) of
subsection (b), subsection (c)(2)(A), and subsection (r)(4);
(II)subsections (a)
and (c)(3) of section 237 (12 U.S.C. 1715z–2); and
(III)subsections
(d)(2)(B) and (m)(1) of section 255 (12 U.S.C. 1715z–20);
(xi)section
502(h)(4)(B) of the Housing Act of
1949 (42 U.S.C. 1472(h)(4)(B)); and
(xii)section 508 of
the Housing and Urban Development Act
of 1970 (12 U.S.C. 1701z–7).
(C)Rental housing
counselingFor purposes of this subsection, the term rental
housing counseling means counseling related to rental of residential
property, which may include counseling regarding future homeownership
opportunities and providing referrals for renters and prospective renters to
entities providing counseling and shall include counseling related to such
topics that is provided pursuant to—
(i)section 105(a)(20)
of the Housing and Community Development Act of
1974 (42 U.S.C. 5305(a)(20));
(ii)in the
United States Housing Act of
1937—
(I)section 9(e) (42
U.S.C. 1437g(e));
(II)section
18(a)(4)(D) (42 U.S.C. 1437p(a)(4)(D));
(III)section 23(c)(4)
(42 U.S.C. 1437u(c)(4));
(IV)section 32(e)(4)
(42 U.S.C. 1437z–4(e)(4));
(V)section
33(d)(2)(B) (42 U.S.C. 1437z–5(d)(2)(B)); and
(VI)section 302(b)(6)
(42 U.S.C. 1437aaa–1(b)(6));
(iii)section
233(b)(2) of the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. 12773(b)(2));
(iv)section 106 of
the Housing and Urban Development Act
of 1968 (12 U.S.C. 1701x);
(v)section 422(b)(6)
of the Cranston-Gonzalez National Affordable
Housing Act (42 U.S.C. 12872(b)(6));
(vi)section
491(b)(1)(F)(iii) of the McKinney-Vento Homeless Assistance Act (42 U.S.C.
11408(b)(1)(F)(iii));
(vii)sections 202(3)
and 810(b)(2)(A) of the Native American Housing and Self-Determination Act of
1996 (25 U.S.C. 4132(3), 4229(b)(2)(A)); and
(viii)the rental
assistance program under section 8 of the United
States Housing Act of 1937 (42 U.S.C. 1437f).
(2)The Secretary, in conjunction with the advisory
committee established under section 4(g)(4) of the Department of Housing and
Urban Development Act (42 U.S.C. 3533(g)(4), shall establish standards for
materials and forms to be used, as appropriate, by organizations providing
homeownership counseling services, including any recipients of assistance
pursuant to subsection (a)(4).
(3)Mortgage
software systems
(A)The
Secretary shall provide for the certification of various computer software
programs for consumers to use in evaluating different residential mortgage loan
proposals. The Secretary shall require, for such certification, that the
mortgage software systems take into account—
(i)the consumer’s
financial situation and the cost of maintaining a home, including insurance,
taxes, and utilities;
(ii)the amount of
time the consumer expects to remain in the home or expected time to maturity of
the loan; and
(iii)such other
factors as the Secretary considers appropriate to assist the consumer in
evaluating whether to pay points, to lock in an interest rate, to select an
adjustable or fixed rate loan, to select a conventional or government-insured
or guaranteed loan and to make other choices during the loan application
process.
If the
Secretary determines that available existing software is inadequate to assist
consumers during the residential mortgage loan application process, the
Secretary shall arrange for the development by private sector software
companies of new mortgage software systems that meet the Secretary’s
specifications.(B)Use and initial
availabilitySuch certified computer software programs shall be
used to supplement, not replace, housing counseling. The Secretary shall
provide that such programs are initially used only in connection with the
assistance of housing counselors certified pursuant to subsection (e).
(C)After
a period of initial availability under subparagraph (B) as the Secretary
considers appropriate, the Secretary shall take reasonable steps to make
mortgage software systems certified pursuant to this paragraph widely available
through the Internet and at public locations, including public libraries,
senior-citizen centers, public housing sites, offices of public housing
agencies that administer rental housing assistance vouchers, and housing
counseling centers.
(4)National public
service multimedia campaigns to promote housing counseling
(A)The Director of
Housing Counseling shall develop, implement, and conduct national public
service multimedia campaigns designed to make persons facing mortgage
foreclosure, persons considering a subprime mortgage loan to purchase a home,
elderly persons, persons who face language barriers, low-income persons, and
other potentially vulnerable consumers aware that it is advisable, before
seeking or maintaining a residential mortgage loan, to obtain homeownership
counseling from an unbiased and reliable sources and that such homeownership
counseling is available, including through programs sponsored by the Secretary
of Housing and Urban Development.
(B)Each segment of
the multimedia campaign under subparagraph (A) shall publicize the toll-free
telephone number and web site of the Department of Housing and Urban
Development through which persons seeking housing counseling can locate a
housing counseling agency in their State that is certified by the Secretary of
Housing and Urban Development and can provide advice on buying a home, renting,
defaults, foreclosures, credit issues, and reverse mortgages.
(C)Authorization of
appropriationsThere are
authorized to be appropriated to the Secretary, not to exceed $3,000,000 for
fiscal years 2009, 2010, and 2011, for the development, implementation, and
conducting of national public service multimedia campaigns under this
paragraph.
(5)The Secretary shall provide advice and technical
assistance to States, units of general local government, and nonprofit
organizations regarding the establishment and operation of, including
assistance with the development of content and materials for, educational
programs to inform and educate consumers, particularly those most vulnerable
with respect to residential mortgage loans (such as elderly persons, persons
facing language barriers, low-income persons, and other potentially vulnerable
consumers), regarding home mortgages, mortgage refinancing, home equity loans,
and home repair
loans.
.
(2)Conforming
amendments to grant program for homeownership counseling
organizationsSection 106(c)(5)(A)(ii) of the
Housing and Urban Development Act of
1968 (12 U.S.C. 1701x(c)(5)(A)(ii)) is amended—
(A)in subclause
(III), by striking and
at the end;
(B)in subclause (IV)
by striking the period at the end and inserting ; and
;
and
(C)by inserting after
subclause (IV) the following new subclause:
(V)notify the housing
or mortgage applicant of the availability of mortgage software systems provided
pursuant to subsection
(g)(3).
.
(c)Grants for
housing counseling assistanceSection 106(a) of the
Housing and Urban Development Act of
1968 (12 U.S.C. 1701x(a)(3)) is amended by adding at the end the following new
paragraph:
(4)Homeownership and rental counseling
assistance
(A)The
Secretary shall make financial assistance available under this paragraph to
States, units of general local governments, and nonprofit organizations
providing homeownership or rental counseling (as such terms are defined in
subsection (g)(1)).
(B)The
Secretary shall establish standards and guidelines for eligibility of
organizations (including governmental and nonprofit organizations) to receive
assistance under this paragraph.
(C)Assistance
made available under this paragraph shall be distributed in a manner that
encourages efficient and successful counseling programs.
(D)Authorization of
appropriationsThere are authorized to be appropriated
$45,000,000 for each of fiscal years 2009 through 2012 for—
(i)the operations of the Office of
Housing Counseling of the Department of Housing and Urban Development;
(ii)the responsibilities of the
Secretary under paragraphs (2) through (5) of subsection (g); and
(iii)assistance pursuant to this
paragraph for entities providing homeownership and rental
counseling.
.
(d)Requirements To
use HUD-certified counselors under HUD programsSection 106(e) of
the Housing and Urban Development Act
of 1968 (12 U.S.C. 1701x(e)) is amended—
(1)by striking
paragraph (1) and inserting the following new paragraph:
(1)Requirement for
assistanceAn organization may not receive assistance for
counseling activities under subsection (a)(1)(iii), (a)(2), (a)(4), (c), or (d)
of this section, or under section 101(e), unless the organization, or the
individuals through which the organization provides such counseling, has been
certified by the Secretary under this subsection as competent to provide such
counseling.
;
(2)in paragraph
(2)—
(A)by inserting
and for certifying organizations
before the period at the end of
the first sentence; and
(B)in the second
sentence by striking for certification
and inserting ,
for certification of an organization, that each individual through which the
organization provides counseling shall demonstrate, and, for certification of
an individual,
;
(3)in paragraph (3),
by inserting organizations and
before
individuals
;
(4)by redesignating
paragraph (3) as paragraph (5); and
(5)by inserting after
paragraph (2) the following new paragraphs:
(3)Requirement
under hud programsAny homeownership counseling or rental housing
counseling (as such terms are defined in subsection (g)(1)) required under, or
provided in connection with, any program administered by the Department of
Housing and Urban Development shall be provided only by organizations or
counselors certified by the Secretary under this subsection as competent to
provide such counseling.
(4)The
Secretary shall take such actions as the Secretary considers appropriate to
ensure that individuals and organizations providing homeownership or rental
housing counseling are aware of the certification requirements and standards of
this subsection and of the training and certification programs under subsection
(f).
.
(e)Study of
defaults and foreclosuresThe Secretary of Housing and Urban
Development shall conduct an extensive study of the root causes of default and
foreclosure of home loans, using as much empirical data as are available. The
study shall also examine the role of escrow accounts in helping prime and
nonprime borrowers to avoid defaults and foreclosures. Not later than 12 months
after the date of the enactment of this Act, the Secretary shall submit to the
Congress a preliminary report regarding the study. Not later than 24 months
after such date of enactment, the Secretary shall submit a final report
regarding the results of the study, which shall include any recommended
legislation relating to the study, and recommendations for best practices and
for a process to identify populations that need counseling the most.
(f)Definitions for
counseling-related programsSection 106 of the
Housing and Urban Development Act of
1968 (12 U.S.C. 1701x), as amended by the preceding provisions of this section,
is further amended by adding at the end the following new subsection:
(h)For
purposes of this section:
(1)The term nonprofit organization has the
meaning given such term in section 104(5) of the
Cranston-Gonzalez National Affordable Housing
Act (42 U.S.C. 12704(5)), except that subparagraph (D) of such
section shall not apply for purposes of this section.
(2)The
term State means each of the several States, the Commonwealth of
Puerto Rico, the District of Columbia, the Commonwealth of the Northern Mariana
Islands, Guam, the Virgin Islands, American Samoa, the Trust Territories of the
Pacific, or any other possession of the United States.
(3)Unit of general
local governmentThe term unit of general local
government means any city, county, parish, town, township, borough,
village, or other general purpose political subdivision of a
State.
.
(g)Updating and
simplification of mortgage information bookletSection 5 of the
Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2604) is
amended—
(1)in the section
heading, by striking special
and inserting
home
buying
;
(2)by striking
subsections (a) and (b) and inserting the following new subsections:
(a)Preparation and
distributionThe Secretary shall prepare, at least once every 5
years, a booklet to help consumers applying for federally related mortgage
loans to understand the nature and costs of real estate settlement services.
The Secretary shall prepare the booklet in various languages and cultural
styles, as the Secretary determines to be appropriate, so that the booklet is
understandable and accessible to homebuyers of different ethnic and cultural
backgrounds. The Secretary shall distribute such booklets to all lenders that
make federally related mortgage loans. The Secretary shall also distribute to
such lenders lists, organized by location, of homeownership counselors
certified under section 106(e) of the Housing
and Urban Development Act of 1968 (12 U.S.C. 1701x(e)) for use in
complying with the requirement under subsection (c) of this section.
(b)Each
booklet shall be in such form and detail as the Secretary shall prescribe and,
in addition to such other information as the Secretary may provide, shall
include in plain and understandable language the following information:
(1)A description and
explanation of the nature and purpose of the costs incident to a real estate
settlement or a federally related mortgage loan. The description and
explanation shall provide general information about the mortgage process as
well as specific information concerning, at a minimum—
(A)balloon
payments;
(B)prepayment
penalties; and
(C)the trade-off
between closing costs and the interest rate over the life of the loan.
(2)An explanation and
sample of the uniform settlement statement required by section 4.
(3)A list and
explanation of lending practices, including those prohibited by the Truth in
Lending Act or other applicable Federal law, and of other unfair practices and
unreasonable or unnecessary charges to be avoided by the prospective buyer with
respect to a real estate settlement.
(4)A list and
explanation of questions a consumer obtaining a federally related mortgage loan
should ask regarding the loan, including whether the consumer will have the
ability to repay the loan, whether the consumer sufficiently shopped for the
loan, whether the loan terms include prepayment penalties or balloon payments,
and whether the loan will benefit the borrower.
(5)An explanation of
the right of rescission as to certain transactions provided by sections 125 and
129 of the Truth in Lending Act.
(6)A brief
explanation of the nature of a variable rate mortgage and a reference to the
booklet entitled Consumer Handbook on Adjustable Rate Mortgages
,
published by the Board of Governors of the Federal Reserve System pursuant to
section 226.19(b)(1) of title 12, Code of Federal Regulations, or to any
suitable substitute of such booklet that such Board of Governors may
subsequently adopt pursuant to such section.
(7)A brief
explanation of the nature of a home equity line of credit and a reference to
the pamphlet required to be provided under section 127A of the Truth in Lending
Act.
(8)Information about
homeownership counseling services made available pursuant to section 106(a)(4)
of the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701x(a)(4)), a recommendation that the
consumer use such services, and notification that a list of certified providers
of homeownership counseling in the area, and their contact information, is
available.
(9)An explanation of
the nature and purpose of escrow accounts when used in connection with loans
secured by residential real estate and the requirements under section 10 of
this Act regarding such accounts.
(10)An explanation of
the choices available to buyers of residential real estate in selecting persons
to provide necessary services incidental to a real estate settlement.
(11)An explanation of
a consumer’s responsibilities, liabilities, and obligations in a mortgage
transaction.
(12)An explanation of
the nature and purpose of real estate appraisals, including the difference
between an appraisal and a home inspection.
(13)Notice that the
Office of Housing of the Department of Housing and Urban Development has made
publicly available a brochure regarding loan fraud and a World Wide Web address
and toll-free telephone number for obtaining the brochure.
The
booklet prepared pursuant to this section shall take into consideration
differences in real estate settlement procedures that may exist among the
several States and territories of the United States and among separate
political subdivisions within the same State and
territory.;
(3)in subsection (c),
by inserting at the end the following new sentence: Each lender shall
also include with the booklet a reasonably complete or updated list of
homeownership counselors who are certified pursuant to section 106(e) of the
Housing and Urban Development Act of
1968 (12 U.S.C. 1701x(e)) and located in the area of the lender.
;
and
(4)in subsection (d),
by inserting after the period at the end of the first sentence the following:
The lender shall provide the HUD-issued booklet in the version that is
most appropriate for the person receiving it.
.
5.Requirements for
FHA-approved mortgagees
(a)Paragraph (2) of
section 202(c) of the National Housing Act (12 U.S.C. 1708(c)) is
amended—
(1)in subparagraph (E), by inserting
and
after the semicolon;
(2)in subparagraph
(F), by striking ; and
and inserting a period; and
(3)by striking
subparagraph (G).
(b)Limitations on
participation and mortgagee approval and use of nameSection 202 of the National Housing Act (12
U.S.C. 1708) is amended—
(1)by redesignating
subsections (d), (e), and (f) as subsections (e), (f), and (g),
respectively;
(2)by inserting after
subsection (c) the following new subsection:
(d)Limitations on
participation in origination and mortgagee approval
(1)Any person or entity that is not approved
by the Secretary to serve as a mortgagee, as such term is defined in subsection
(c)(7), shall not participate in the origination of an FHA-insured loan except
as authorized by the Secretary.
(2)In order to be
eligible for approval by the Secretary, an applicant mortgagee shall not be,
and shall not have any officer, partner, director, principal, manager,
supervisor, loan processor, loan underwriter, or loan originator of the
applicant mortgagee who is—
(A)currently
suspended, debarred, under a limited denial of participation (LDP), or
otherwise restricted under part 24 or 25 of title 24 of the Code of Federal
Regulations, or any successor regulations to such parts, or under similar
provisions of any other Federal agency;
(B)under indictment
for, or has been convicted of, an offense that reflects adversely upon the
applicant’s integrity, competence or fitness to meet the responsibilities of an
approved mortgagee;
(C)subject to
unresolved findings contained in a Department of Housing and Urban Development
or other governmental audit, investigation, or review;
(D)engaged in
business practices that do not conform to generally accepted practices of
prudent mortgagees or that demonstrate irresponsibility;
(E)convicted of, or
who has pled guilty or nolo contendre to, a felony related to participation in
the real estate or mortgage loan industry—
(i)during the 7-year
period preceding the date of the application for licensing and registration;
or
(ii)at any time
preceding such date of application, if such felony involved an act of fraud,
dishonesty, or a breach of trust, or money laundering;
(F)in violation of
provisions of the S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et
seq.) or any applicable provision of State law; or
(G)in violation of
any other requirement as established by the Secretary.
(3)Rulemaking and
implementationThe Secretary
shall conduct a rulemaking to carry out this subsection. The Secretary shall
implement this subsection not later than the expiration of the 60-day period
beginning upon the date of the enactment of this subsection by notice,
mortgagee letter, or interim final regulations, which shall take effect upon
issuance.
;
and
(3)by adding at the
end the following new subsection:
(h)The Secretary shall, by
regulation, require each mortgagee approved by the Secretary for participation
in the FHA mortgage insurance programs of the Secretary—
(1)to use the
business name of the mortgagee that is registered with the Secretary in
connection with such approval in all advertisements and promotional materials,
as such terms are defined by the Secretary, relating to the business of such
mortgagee in such mortgage insurance programs; and
(2)to maintain copies
of all such advertisements and promotional materials, in such form and for such
period as the Secretary
requires.
.
(c)The National Housing Act is amended by striking section
532 (12 U.S.C. 1735f–10) and inserting the following new section:
532.Change of
mortgagee status
(a)Upon the occurrence of any action described
in subsection (b), an approved mortgagee shall immediately submit to the
Secretary, in writing, notification of such occurrence.
(b)The actions described in this subsection
are as follows:
(1)The debarment,
suspension of a Limited Denial of Participation (LDP), or application of other
sanctions, fines, or penalties applied to the mortgagee or to any officer,
partner, director, principal, manager, supervisor, loan processor, loan
underwriter, or loan originator of the mortgagee pursuant to applicable
provisions of State or Federal law.
(2)The revocation of
a State-issued mortgage loan originator license issued pursuant to the S.A.F.E.
Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et seq.) or any other similar
declaration of ineligibility pursuant to State
law.
.
(d)Section 536 of the
National Housing Act (12 U.S.C. 1735f–14) is amended—
(1)in subsection
(b)—
(A)in paragraph
(1)—
(i)in
the matter preceding subparagraph (A), by inserting or any of its
owners, officers, or directors
after mortgagee or
lender
;
(ii)in
subparagraph (H), by striking title I
and all that follows
through Act of 1989)
and inserting “title I or II”; and
(iii)by
inserting after subparagraph (J) the following:
(K)Violation of section 202(d) of this Act (12
U.S.C. 1708(d)).
;
and
(B)in paragraph (2)—
(i)in
subparagraph (B), by striking or
at the end;
(ii)in
subparagraph (C), by striking the period at the end and inserting ;
or
; and
(iii)by
adding at the end the following new subparagraph:
(D)causing or participating in any of the
violations set forth in paragraph (1) of this
subsection.
;
and
(2)in subsection (g), by striking The
term
and all that follows through the end of the sentence and inserting
For purposes of this section, a person acts knowingly when a person has
actual knowledge of acts or should have known of the acts.
.
(e)Expanded review
of FHA mortgagee applicants and newly approved mortgageesNot
later than the expiration of the 3-month period beginning upon the date of the
enactment of this Act, the Secretary of Housing and Urban Development
shall—
(1)expand the
existing process for reviewing new applicants for approval for participation in
the mortgage insurance programs of the Secretary for mortgages on 1- to
4-family residences for the purpose of identifying applicants who represent a
high risk to the Mutual Mortgage Insurance Fund; and
(2)implement procedures that, for mortgagees
approved during the 12-month period ending upon such date of enactment—
(A)expand the number
of mortgages originated by such mortgagees that are reviewed for compliance
with applicable laws, regulations, and policies; and
(B)include a process
for random reviews of such mortgagees and a process for reviews that is based
on volume of mortgages originated by such mortgagees.
6.Commission on the
Foreclosure and Mortgage Lending Crisis
(a)Establishment of
CommissionThere is
established in the legislative branch a commission to be known as the
Commission on the Foreclosure and Mortgage Lending Crisis
(in
this section referred to as the Commission
).
(b)
(1)Congress finds the following:
(A)The United States
is experiencing a steady increase in foreclosures and mortgage lending problems
that have impacted homeowners, families, communities, the United States economy
and the global credit markets.
(B)In 2006, there
were an estimated 1,300,000 foreclosures in the United States.
(C)This number
increased by 79 percent in 2007, bringing the estimated number of foreclosures
nationwide to 2,200,000.
(D)In 2008, an
estimated 3,200,000 foreclosures were reported.
(E)Estimates suggest
that this trend is likely to continue with millions more Americans potentially
losing their homes to foreclosure in the next 4 years.
(2)The purpose of this section is to establish
a commission to undertake a comprehensive analysis and review of the origins
and causes of the current foreclosure and mortgage lending crisis and to issue
a report of its findings to the Congress. The Commission shall also recommend
legislative and regulatory changes that will prohibit the kinds of lending
practices that contributed to the increased foreclosure rate and the current
mortgage lending crisis.
(c)
(1)The
Commission shall be composed of 10 members as follows:
(A)2 members shall be
appointed by the Speaker of the House of Representatives.
(B)2 members shall be
appointed by the minority leader of the House of Representatives.
(C)2 members shall be
appointed by the majority leader of the Senate.
(D)2 members shall be
appointed by the minority leader of the Senate.
(E)The Secretary of
the Treasury or his designee.
(F)The chairman of
the Board of Governors of the Federal Reserve System or his designee.
(2)All members of
the Commission shall be appointed not later than 30 days after the date of the
enactment of this Act.
(3)Of the members appointed to the Commission
under subparagraphs (A) through (D) of paragraph (1), 2 shall be designated as
the co-chairmen of the Commission. One co-chairman shall be designated by the
Speaker of the House of Representatives in consultation with the majority
leader of the Senate and the other co-chairman shall be designated by the
minority leader of the House of Representatives in consultation with the
minority leader of the Senate.
(4)Any vacancy in the Commission shall not
affect its powers, but shall be filled in the same manner in which the original
appointment was made.
(5)
(A)Members of the Commission shall serve without pay.
(B)While away from their homes or regular places of
business in the performance of services for the Commission, members of the
Commission shall be allowed travel expenses, including per diem in lieu of
subsistence, in the same manner as persons employed intermittently in the
Government service are allowed expenses under section 5703(b) of title 5,
United States Code.
(6)Initial Meeting;
Rules of Procedure; Quorum
(A)The Commission shall
meet and begin the operations of the Commission not later than 60 days after
the date of the enactment of this Act.
(B)After
its initial meeting, the Commission shall meet upon the call of the co-chairmen
or a majority of its members.
(C)A
majority of the members of the Commission shall constitute a quorum.
(D)The Commission may
establish rules for the conduct of the Commission’s business, if such rules are
consistent with this Act or other applicable law.
(d)
(1)The Commission shall—
(A)study and assess the current legal and
regulatory framework governing the housing mortgage lending markets and
investigate how the such framework contributed to the increased foreclosure
rate, including—
(i)refinancing
practices;
(ii)loan to value
ratios; and
(iii)the prevalence
of fraudulent industry practices;
(B)recommend changes
to the current legal and regulatory framework to prohibit lending practices
that have contributed to the mortgage lending crisis;
(C)review the impact
of subprime abuses and predatory lending practices;
(D)assess the role of
States in enacting policies to reduce predatory lending practices and abuses in
the subprime markets;
(E)assess the impact
of mortgage backed securities and Fannie Mae and Freddie Mac on the mortgage
lending crisis; and
(F)assess the impact
of the Community Reinvestment Act on the mortgage lending crisis.
(2)Not later than 12
months after the date of enactment of this Act, the Commission shall submit to
the Congress a final report containing such findings, conclusions, and
recommendations as have been agreed to by a majority of Commission members. If,
at the conclusion of such 12 month period, a majority of the Commission
determines it necessary, the Commission may be granted a 6 month extension for
submission of its final report upon written notification to the
Congress.
(e)
(1)The Commission, or on the authority of the Commission or
any subcommittee or member thereof, may, for the purpose of carrying out this
title—
(A)hold such hearings
and sit and act at such times and places, take such testimony, receive such
evidence, administer such oaths; and
(B)subject to
paragraph (2)(A), subpoena or otherwise require, the attendance and testimony
of such witnesses and the production of such books, records, correspondence,
memoranda, papers, and documents as the Commission or such designated
subcommittee or designated member may determine advisable.
(2)
(A)
(i)A subpoena may be issued under this subsection
only—
(I)by a co-chairman;
or
(II)by the
affirmative vote of a majority of the members of the Commission.
(ii)Subject to clause (i), subpoenas issued
under this subparagraph may be issued under the signature of a co-chairman or
any member designated by a majority of the Commission, may be served by any
person designated by the co-chairmen or by a member designated by a majority of
the Commission.
(B)
(i)In the case of contumacy or failure to obey a subpoena
issued under subparagraph (A), the United States district court for the
judicial district in which the subpoenaed person resides, is served, or may be
found, or where the subpoena is returnable, may issue an order requiring such
person to appear at any designated place to testify or to produce documentary
or other evidence. Any failure to obey the order of the court may be punished
by the court as a contempt of that court.
(ii)In the case of any failure of any witness to comply
with any subpoena or to testify when summoned under authority of this section,
the Commission may, by majority vote, certify a statement of fact constituting
such failure to the appropriate United States attorney, who may bring the
matter before the grand jury for its action, under the same statutory authority
and procedures as if the United States attorney had received as certification
under section 102 through 104 of the Revised Statutes of the United States (2
U.S.C. 192 through 194).
(3)The Commission may,
to such extent and in such amounts as are provided in appropriation Acts, enter
into contracts to enable the Commission to discharge its duties under this
section.
(4)Information From
Federal Agencies
(A)The Commission is
authorized to secure directly from any executive department, bureau, agency,
board, commission, office, independent establishment, or instrumentality of the
Government, information, suggestions, estimates, and statistics for the
purposes of this section. Each department, bureau, agency, board, commission,
office, independent establishment, or instrumentality shall, to the extent
authorized by law, furnish such information, suggestions, estimates, and
statistics directly to the Commission, upon request made by the co-chairmen of
any subcommittee created by a majority of the Commission, or any member
designated by a majority of the Commission.
(B)Receipt,
handling, storage, and disseminationInformation shall only be received,
handled, stored, and disseminated by members of the Commission and its staff
consistent with all applicable statutes, regulations, and Executive
orders.
(5)Assistance From
Federal Agencies
(A)General services
administrationThe Administrator of General Services shall
provide to the Commission on a reimbursable basis administrative support and
other services for the performance of the Commission’s functions.
(B)Other
departments and agenciesIn addition to the assistance described
in subparagraph (A), departments and agencies of the United States may provide
to the Commission such services, funds, facilities, staff, and other support
services as they may determine advisable and as may be authorized by
law.
(6)The Commission may
use the United States mails in the same manner and under the same conditions as
departments and agencies of the United States.
(f)
(1)
(A)Appointment and
compensationThe co-chairman, in accordance with rules agreed
upon by the Commission, may appoint and fix the compensation of a staff
director and such other personnel as may be necessary to enable the Commission
to carry out its duties, without regard to the provisions of title 5, United
States Code, governing appointments in the competitive service, and without
regard to the provisions of chapter 51 and subchapter III of chapter 53 of such
title relating to classification and General Schedule pay rates, except that no
rate of pay fixed under this subsection may exceed the equivalent of that
payable for a position at level IV of the Executive Schedule under section 5316
of title 5, United States Code.
(B)Personnel as
Federal employees
(i)The executive director and any personnel of the
Commission who are employees shall be employees under section 2105 of title 5,
United States Code, for purposes of chapters 63, 81, 83, 84, 85, 87, 89, and 90
of that title.
(ii)Members of the
CommissionClause (i) shall not apply to members of the
Commission.
(2)Any
Federal Government employee may be detailed to the Commission without
reimbursement from the Commission, and such detailee shall retain the rights,
status, and privileges of his or her regular employment without
interruption.
(3)Expert and
Consultant ServicesThe Commission is authorized to procure the
services of experts and consultants in accordance with section 3109 of title 5,
United States Code, but at rates not to exceed the daily rate paid to a person
occupying a position at level IV of the Executive Schedule under section 5315
of title 5, United States Code.
(4)Notwithstanding section 1342 of title 31, United States
Code, the Commission may accept and use voluntary and uncompensated services as
the Commission determines necessary.
(g)Nonapplicability
of Federal Advisory Committee Act
(1)The Federal Advisory Committee Act (5 U.S.C. App.) shall
not apply to the Commission.
(2)Public Meetings
and Release of Public Versions of ReportsThe Commission
shall—
(A)hold public
hearings and meetings to the extent appropriate; and
(B)release public
versions of the report required under subsection (d)(2).
(3)Any public hearings of the Commission shall be conducted
in a manner consistent with the protection of information provided to or
developed for or by the Commission as required by any applicable statute,
regulations, or Executive order.
(h)
(1)The Commission and
all the authorities of this section, shall terminate not later than 60 days
after the date on which the final report is submitted under subsection
(d)(2).
(2)Administrative
activities before terminationThe Commission may use the 60-day
period referred to in paragraph (1) for the purpose of concluding its
activities, including providing testimony to committees of Congress concerning
its report and disseminating the final report.
(i)Authorization of
appropriationThere are
authorized to be appropriated such sums as necessary to carry out this
section.
7.Authorization of
appropriations for combating mortgage fraudFor fiscal years 2009, 2010, 2011, 2012, and
2013, there are authorized to be appropriated to the Attorney General a total
of—
(1)$31,250,000 to
support the employment of 30 additional agents of the Federal Bureau of
Investigation and 2 additional dedicated prosecutors at the Department of
Justice to coordinate prosecution of mortgage fraud efforts with the offices of
the United States Attorneys; and
(2)$750,000 to
support the operations of interagency task forces of the Federal Bureau of
Investigation in the areas with the 15 highest concentrations of mortgage
fraud.
8.Enhancement of
liquidity and stability of insured depository institutions to ensure
availability of credit and reduction of foreclosures
(a)Permanent
increase in deposit insurance
(1)Amendments to
Federal Deposit Insurance ActEffective upon the date of the
enactment of this Act, section 11(a) of the Federal Deposit Insurance Act (12
U.S.C. 1821(a)) is amended—
(A)in paragraph
(1)(E), by striking $100,000
and inserting
$250,000
;
(B)in paragraph
(1)(F)(i), by striking 2010
and inserting
2015
;
(C)in subclause (I)
of paragraph (1)(F)(i), by striking $100,000
and inserting
$250,000
;
(D)in subclause (II)
of paragraph (1)(F)(i), by striking the calendar year preceding the date
this subparagraph takes effect under the Federal Deposit Insurance Reform Act
of 2005
and inserting calendar year 2008
; and
(E)in paragraph
(3)(A), by striking , except that $250,000 shall be substituted for
$100,000 wherever such term appears in such paragraph
.
(2)Amendment to
Federal Credit Union ActSection 207(k) of the Federal Credit
Union Act (12 U.S.C. 1787(k)) is amended—
(A)in paragraph
(3)—
(i)by
striking the opening quotation mark before $250,000
;
(ii)by
striking , except that $250,000 shall be substituted for $100,000
wherever such term appears in such section
; and
(iii)by
striking the closing quotation mark after the closing parenthesis; and
(B)in paragraph (5),
by striking $100,000
and inserting
$250,000
.
(3)Section 136 of the Emergency Economic Stabilization Act
(12 U.S.C. 5241) is hereby repealed.
(b)Extension of
restoration plan periodSection 7(b)(3)(E)(ii) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(b)(3)(E)(ii)) is amended by striking
5-year period
and inserting 8-year period
.
(c)FDIC and NCUA
borrowing authority
(1)Section 14(a) of the Federal Deposit
Insurance Act (12 U.S.C. 1824(a)) is amended by striking
$30,000,000,000
and inserting
$100,000,000,000
.
(2)Section 203(d)(1) of the Federal Credit
Union Act (12 U.S.C. 1783(d)(1)) is amended by striking
$100,000,000
and inserting $6,000,000,000
.
(d)Expanding
systemic risk special assessmentsSection 13(c)(4)(G)(ii) of the
Federal Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)(ii)) is amended to read
as follows:
(ii)
(I)The Corporation shall
recover the loss to the Deposit Insurance Fund arising from any action taken or
assistance provided with respect to an insured depository institution under
clause (i) from 1 or more special assessments on insured depository
institutions, depository institution holding companies (with the concurrence of
the Secretary of the Treasury with respect to holding companies), or both, as
the Corporation determines to be appropriate.
(II)Treatment of
depository institution holding companiesFor purposes of this
clause, sections 7(c)(2) and 18(h) shall apply to depository institution
holding companies as if they were insured depository institutions.
(III)The
Corporation shall prescribe such regulations as it deems necessary to implement
this clause. In prescribing such regulations, defining terms, and setting the
appropriate assessment rate or rates, the Corporation shall establish rates
sufficient to cover the losses incurred as a result of the actions of the
Corporation under clause (i) and shall consider: the types of entities that
benefit from any action taken or assistance provided under this subparagraph;
economic conditions, the effects on the industry, and such other factors as the
Corporation deems appropriate and relevant to the action taken or the
assistance provided. Any funds so collected that exceed actual losses shall be
placed in the Deposit Insurance
Fund.
.
(e)Establishment of
a national credit union share insurance fund restoration plan
periodSection 202(c)(2) of the Federal Credit Union Act (12
U.S.C. 1782(c)(2)) is amended by adding at the end the following new
subparagraph:
(D)
(i)Whenever—
(I)the Board projects that the equity ratio of
the Fund will, within 6 months of such determination, fall below the minimum
amount specified in subparagraph (C) for the designated equity ratio; or
(II)the equity ratio of the Fund actually falls
below the minimum amount specified in subparagraph (C) for the equity ratio
without any determination under sub-clause (I) having been made,
the Board
shall establish and implement a Share Insurance Fund restoration plan within 90
days that meets the requirements of clause (ii) and such other conditions as
the Board determines to be appropriate.(ii)Requirements of
restoration planA Share
Insurance Fund restoration plan meets the requirements of this clause if the
plan provides that the equity ratio of the Fund will meet or exceed the minimum
amount specified in subparagraph (C) for the designated equity ratio before the
end of the 5-year period beginning upon the implementation of the plan (or such
longer period as the Board may determine to be necessary due to extraordinary
circumstances).
(iii)Not more than 30 days after the Board
establishes and implements a restoration plan under clause (i), the Board shall
publish in the Federal Register a detailed analysis of the factors considered
and the basis for the actions taken with regard to the
plan.
.
9.Prohibition on the
receipt of common stock and the exercise of stock voting powerTitle I of the Emergency Economic
Stabilization Act of 2008 is amended by adding at the end the following new
section:
137.Prohibition on
the receipt of common stock and the exercise of stock voting power
(a)Notwithstanding any
other provision of this title, in carrying out this title the Secretary shall
not make any purchase for which the Secretary receives control-diluting
stock.
(b)Subsection (a) shall apply to purchases
made by the Secretary under this title on or after the date of the enactment of
this section.
(c)Conversion of
certain securities received by the SecretaryNotwithstanding any other provision of this
title, the Secretary shall not convert any security received by the Secretary
under this title, other than a warrant, into control-diluting stock.
(d)Control-diluting
stock definedFor purposes of this section, the term
control-diluting stock
means—
(1)common stock of a
financial institution;
(2)any other voting
stock of a financial institution, other than voting stock that the Secretary
agrees not to exercise the voting power of such stock; or
(3)a warrant giving
the right to the Secretary to receive stock described in paragraph (1) or
(2).
.
10.Treatment of gain on
disposition of subsidized residences
(a)In the case any
taxpayer who holds (at the time of the provision of the relief or assistance
described in subsection (b)) any interest in a subsidized residence—
(1)section 121 of the Internal Revenue Code of
1986 (relating to exclusion of gain from sale of principal residence) shall not
apply to any gain from the sale or exchange of such interest, and
(2)the rate of tax
under section 1 of such Code on such gain shall be twice the rate which would
otherwise apply.
(b)For purposes of
this section, the term subsidized residence
means any residence
that is subject to a mortgage with respect to which relief or assistance is
provided under this Act or any amendment made by this Act, under any authority
or program established or amended by this Act, or by any financial institution
subject to the amendments made by section 204.
11.Refundable tax credit
for residences purchased during 2009 or 2010
(a)Subpart C of part IV of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 (relating to refundable credits) is amended by
inserting after section 36 the following new section:
36A.General
homebuyer credit for residences purchased during 2009 or 2010
(a)In the case of an individual who makes an eligible
purchase during the taxable year, there shall be allowed as a credit against
the tax imposed by this subtitle for such taxable year an amount equal to so
much of the purchase price as does not exceed the applicable amount.
(b)For purposes of subsection (a), the applicable amount
is—
(1)$10,000 in the
case of an eligible purchase where the down payment is at least 15 percent of
the purchase price,
(2)$5,000 in the case
of an eligible purchase where the down payment is at least 10 percent of the
purchase price,
(3)$2,000 in the case
of an eligible purchase where the down payment is at least 5 percent of the
purchase price, and
(4)zero in any other
case.
(c)For
purposes of this section—
(1)The term eligible purchase means the
purchase of a residence for the taxpayer if—
(A)such residence is
located in the United States,
(B)the construction
of such residence began before 2009, and
(C)such purchase is
made by the taxpayer during 2009 or 2010.
(2)The terms purchase and purchase
price have the respective meanings given such terms by section
26(c).
(d)No
credit shall be allowed under subsection (a) to any taxpayer for any taxable
year with respect to the purchase of a residence if—
(1)credit under
section 36 (relating to first-time homebuyer credit) or 1400C (relating to
first-time homebuyer in the District of Columbia) is allowed to the taxpayer
(or the taxpayer’s spouse) for such taxable year or any prior taxable
year,
(2)the residence is
financed by the proceeds of a qualified mortgage issue the interest on which is
exempt from tax under section 103,
(3)the taxpayer is a
nonresident alien, or
(4)the taxpayer
disposes of such residence (or such residence ceases to be a residence of the
taxpayer (or, if married, the taxpayer’s spouse)) before the close of such
taxable year.
(e)
(1)Rules similar to the rules of section 26(c)(5) shall
apply for purposes of this section.
(2)Married
individuals filing separate returns, etcRules similar to the
rules of subparagraphs (B) and (C) of section 26(b)(1) shall apply for purposes
of this section.
(3)Rules
similar to the rules of section 26(e) shall apply for purposes of this
section.
(f)Rules similar to the rules of section 26(f) shall apply
for purposes of this section, except that—
(1)paragraph (1)
thereof shall be applied by substituting 331/3
percent
for 62/3 percent
,
and
(2)paragraph (7)
thereof shall be applied by substituting 3 years
for 15
years
.
.
(b)
(1)Section 26(b)(2)
of such Code is amended—
(A)in subparagraph
(W)—
(i)by
striking homebuyer credit
and inserting first-time
homebuyer credit
, and
(ii)by
striking and
,
(B)by striking the
period at the end of subparagraph (X) and inserting , and
,
and
(C)by inserting after
subparagraph (X) the following new subparagraph:
(Y)section 36A(f)
(relating to recapture of general homebuyer
credit)
.
(2)Section
6211(b)(4)(A) of such Code is amended by inserting 36A,
after
36,
.
(3)Section 1324(b)(2)
of title 31, United States Code, is amended by inserting 36A,
after 36,
.
(4)The table of
sections for subpart C of part IV of subchapter A of chapter 1 of such Code is
amended by inserting after the item relating to section 36 the following new
item:
Sec. 36A. General homebuyer credit for
residences purchased during 2009 or
2010.
.
(c)The amendments made by this section shall apply to
residences purchased after December 31, 2008, in taxable years ending after
such date.
12.Conditions on
mortgage reliefNotwithstanding any other provision of this
Act or any amendment made by this Act, no relief or assistance may be provided
under this Act or any such amendment, under any authority or program
established or amended by this Act, or by any financial institution subject to
the amendments made by section 8 of this Act, to or on behalf of any mortgagor
unless, before such assistance is provided the agency or entity providing such
relief or assistance makes a determination that—
(1)the mortgagor’s
income was accurately stated on the application for the original mortgage in
connection with which such relief or assistance is being provided;
(2)the residential
property that is subject to the original mortgage in connection with such
relief or assistance is being provided is the principal residence of the
mortgagor;
(3)the mortgagor has
never been convicted under Federal or State law for financial fraud; and
(4)the mortgagor is a
citizen or national of the United States or an alien lawfully admitted for
permanent residence in the United States.