I 111th CONGRESS 1st Session H. R. 2666 IN THE HOUSE OF REPRESENTATIVES June 2, 2009 Ms. Matsui (for herself and Ms. Moore of Wisconsin) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To require the Federal Trade Commission to conduct a rulemaking proceeding with respect to mortgage foreclosure rescue and loan modification services, and for other purposes.

1.

Short title

This Act may be cited as the Mortgage Foreclosure Rescue and Loan Modification Services Fraud Prevention Act of 2009.

2.

FTC rulemaking authority mortgage foreclosure rescue and loan modification services

(a)

Rulemaking

(1)

In general

The Federal Trade Commission shall conduct a rulemaking proceeding, beginning no later than 90 days after the date of the enactment of this Act, with respect to mortgage foreclosure rescue and loan modification services, in accordance with section 553 of title 5, United States Code. The rulemaking shall include the requirements set forth in paragraph (4) below. (2)

Exclusion

A rule described in paragraph (1) shall not apply to an entity that is not subject to enforcement by the Commission under the Federal Trade Commission Act. (3)

Enforcement

(A)

Violations

Any violation of a rule prescribed under this subsection shall be treated as a violation of a rule under section 18 of the Federal Trade Commission Act (15 U.S.C. 57a) regarding unfair or deceptive acts or practices. (B)

Powers and manner of enforcement

The Federal Trade Commission shall enforce any rule prescribed under this subsection in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act were incorporated into and made part of this section. (4)

Rule requirements

The Federal Trade Commission shall include in the rule prescribed under this subsection the following: (A)A requirement that any mortgage foreclosure rescue or loan modification service provided to a homeowner related to the foreclosure of residential real property contain a written contract that contains clear and prominent disclosures regarding the nature of the contract, the services to be provided and results to be achieved, and the total amount and terms of compensation. (B)A requirement that any contract referred to in subparagraph (A) contain a clearly and prominently disclosed right for the homeowner to cancel within a set number of business days as determined by the Federal Trade Commission with no penalty or obligation. (C)A requirement that prohibits or restricts mortgage foreclosure rescue and loan modification services from requesting or receiving any funds until any such services have been fully performed and results have been achieved and the services and results have been documented to the consumer. (D)Other prohibitions or restrictions on mortgage foreclosure rescue and loan modification services that are unfair or deceptive acts or practices. (5)

Exemption

The Commission shall have the authority to exempt entities from the requirements of the rule that it issues to implement this Act, if it determines that the inclusion of such entities in the rule is not necessary to prevent or deter consumer injury. (6)

No preemption

No rule prescribed under this subsection may be construed as preempting any provision of the law of any State. (b)

Enforcement by state attorneys general

(1)

In general

Except as provided in paragraph (6), in any case in which the attorney general of a State has reason to believe that an interest of the residents of that State has been or is threatened or adversely affected by the engagement of any person in a practice that violates a rule prescribed under subsection (a), the State, as parens patriae, may bring a civil action on behalf of the residents of the State in an appropriate district court of the United States or other court of competent jurisdiction to— (A)enjoin that practice; (B)enforce compliance with the rule; (C)obtain damages, restitution, or other compensation on behalf of residents of the State; (D)obtain penalties provided for under subsection (a); and (E)obtain such other relief as the court may consider to be appropriate. (2)

Notice

(A)

Notice to commission

The State shall serve written notice to the Commission of any civil action under paragraph (1) at least 60 days prior to initiating such civil action. (B)

Copy of complaint

The notice served under subparagraph (A) shall include a copy of the complaint to be filed to initiate such civil action, except that if it is not feasible for the State to provide such prior notice, the State shall provide notice immediately upon instituting such civil action. (3)

Intervention by FTC

Upon receiving the notice required by paragraph (2), the Commission may intervene in such civil action and upon intervening— (A)be heard on all matters arising in such civil action; (B)remove the action to the appropriate United States district court; and (C)file petitions for appeal of a decision in such civil action. (4)

Savings clause

No provision of this section shall be construed as— (A)preventing the attorney general of a State from exercising the powers conferred on the attorney general by the laws of such State to conduct investigations or to administer oaths or affirmations or to compel the attendance of witnesses or the production of documentary and other evidence; or (B)prohibiting the attorney general of a State, or other authorized State officer, from proceeding in State or Federal court on the basis of an alleged violation of any civil or criminal statute of that State. (5)

Venue; service of process; joinder

In a civil action brought under paragraph (1)— (A)the venue shall be a judicial district in which the defendant or a related party is found, is an inhabitant, or transacts business, or wherever venue is proper under section 1391 of title 28, United States Code; (B)process may be served without regard to the territorial limits of the district or of the State in which the civil action is instituted; and (C)a person who participated with the defendant or a related party in an alleged violation that is being litigated in the civil action may be joined in the civil action without regard to the residence of the person. (6)

Preemptive action by FTC

Whenever a civil action or an administrative action has been instituted by or on behalf of the Commission for violation of any rule described under paragraph (1), no State may, during the pendency of such action instituted by or on behalf of the Commission, institute a civil action under paragraph (1) against any defendant named in the complaint in such action for violation of any rule as alleged in such complaint. (7)

Award of costs and fees

If the attorney general of a State prevails in any civil action under paragraph (1), the State may recover reasonable costs and attorney fees from the defendant or a related party.