[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 421 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 421

 To amend the Emergency Economic Stabilization Act of 2008 to restrict 
 which assets banks can write off as loss for purposes of the Troubled 
             Assets Relief Program, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 9, 2009

 Mr. Meek of Florida introduced the following bill; which was referred 
                 to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
 To amend the Emergency Economic Stabilization Act of 2008 to restrict 
 which assets banks can write off as loss for purposes of the Troubled 
             Assets Relief Program, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Troubled Assets Relief Program 
Targeted Assets Act of 2009''.

SEC. 2. DEFINITIONS.

    Section 3 of the Emergency Economic Stabilization Act of 2008 
(division A of Public Law 110-343) is amended by striking paragraph (9) 
and inserting the following new paragraphs:
            ``(9) Troubled assets.--The term `troubled assets' means--
                    ``(A) any residential mortgage, and any security, 
                obligation, or other instrument that is based on or 
                related to such mortgage--
                            ``(i) is in pre-foreclosure;
                            ``(ii) with respect to which the borrower 
                        has missed at least 2 payments within the last 
                        6 months; or
                            ``(iii) which is in forbearance; or
                    ``(B) any other financial instrument that the 
                Secretary, after consultation with the Chairman of the 
                Board of Governors of the Federal Reserve System, 
                determines the purchase of which is necessary to 
                promote financial market stability, but only upon 
                transmittal of such determination, in writing, to the 
                appropriate committees of Congress.
            ``(10) Rehabilitated mortgage.--The term `rehabilitated 
        mortgage' means a mortgage which has been restructured, 
        refinanced or otherwise modified to lower the borrower's 
        monthly payment--
                    ``(A) creating a front-end debt ratio, including 
                the cost of mortgage principal, interest, taxes, and 
                insurance, of no more than 30 percent of the gross 
                monthly income of the borrower; or
                    ``(B) to a term deemed affordable by the borrower 
                after full disclosure by the lender and pursuant to 
                rules as may be established by the Secretary.
            ``(11) Independent appraiser.--The term `independent 
        appraiser' means a person who--
                    ``(A) is licensed pursuant to the laws and 
                regulations of the State where the person practices;
                    ``(B) is disclosed to the borrower or buyer; and
                    ``(C) is not coerced, extorted, induced, 
                intimidated, bribed or otherwise influenced by or in 
                collusion with the mortgage lender, mortgaged broker, 
                mortgage banker, real estate broker, appraisal 
                management company or other persons or companies having 
                a vested interest in the transaction.''.

SEC. 3. LIMIT ON AUTHORITY TO WRITE OFF LOSSES.

    Section 101 of the Emergency Economic Stabilization Act of 2008 
(division A of Public Law 110-343) is amended by striking subsection 
(a) and inserting the following new subsection:
    ``(a) Authority.--
            ``(1) In general.--The Secretary is authorized to establish 
        the Troubled Asset Restoration and Assistance Program 
        (hereafter in this title referred to as the `TARAP') to allow 
        the Treasury to purchase lender or servicer `losses' on 
        rehabilitated mortgages, on such terms and conditions as are 
        defined in this Act and determined by the Secretary.
            ``(2) Authority to purchase.--Through the TARAP, the 
        Treasury shall pay up to 80 percent of the difference between 
        the original asset and the rehabilitated asset to the lender or 
        servicer under certain conditions.
            ``(3) Write off of remainder.--That portion of the 
        difference between the original asset and the rehabilitated 
        asset to the lender or servicer that is not paid for by the 
        Secretary under paragraph (2) may be written to loss.''.

SEC. 4. REGULATIONS AND GUIDELINES.

    Section 101(c) of the Emergency Economic Stabilization Act of 2008 
(division A of Public Law 110-343) is amended by striking paragraph (5) 
and inserting the following new paragraphs:
            ``(5) Issuing such regulations and other guidance as may be 
        necessary or appropriate to define terms or carry out the 
        authorities or purposes of this title including determining 
        qualifications for an independent appraiser, making the final 
        determinations as to whether an asset is troubled, what the 
        values are that will determine the amount of purchase, the 
        amount of reductions in the purchase price for purposes of 
        subsection (d)(2), and any other functionality issues required 
        to operate the program.
            ``(6) Conforming to guidelines established in subsection 
        (g), the Secretary is authorized to make all necessary rules 
        and determinations regarding documented best efforts, required 
        timelines, and other processes and procedures.''.

SEC. 5. ELIGIBLE ASSET.

    Section 101 of the Emergency Economic Stabilization Act of 2008 
(division A of Public Law 110-343) is amended--
            (1) by striking subsection (d);
            (2) by redesignating subsection (e) as subsection (i); and
            (3) by inserting after subsection (c) the following new 
        subsections:
    ``(d) Eligible Assets.--
            ``(1) In general.--An asset is eligible for TARAP if--
                    ``(A) it is the borrower's primary residence; and
                    ``(B) it--
                            ``(i) is a troubled asset, as defined in 
                        section 3(9); or
                            ``(ii) it was a troubled asset but has been 
                        rehabilitated by the servicer or lender (as 
                        defined in section 3(10)) on or after October 
                        3, 2008, and allowing the borrower to remain in 
                        the borrower's home.
            ``(2) Assets not included.--An asset is not eligible for 
        TARAP if--
                    ``(A) it was valued at more than 150 percent of the 
                current fair market value; and
                    ``(B) the original value was assessed solely by the 
                lender's appraiser,
        unless the servicer or lender agrees to such reduction in the 
        purchase amount as the Secretary may require as a condition for 
        the purchase.
    ``(f) Eligible Lender or Servicer.--A lender or servicer is 
eligible for TARAP assistance if--
            ``(1) the lender or servicer has agreed to full disclosure 
        requirements as may be established by the Secretary; or
            ``(2) the lender or servicer has agreed to use an 
        independent appraiser and standard appraisal practices as may 
        be established by the Secretary;
    ``(g) Program Guidelines.--
            ``(1) TARAP shall pay a servicer or lender up to 80 percent 
        of the difference between the original asset and rehabilitated 
        asset pursuant to such regulations as may be prescribed by the 
        Secretary.
            ``(2) The servicer or lender shall use documented best 
        efforts, prior to foreclosure, to work with the borrower to 
        create an affordable front-end debt ratio of up to 30 percent 
        of the borrower's gross monthly income.
            ``(3) The Secretary may establish mechanisms to provide for 
        those assets which cannot be rehabilitated under the preceding 
        guidelines.
    ``(h) Program Termination.--All authority under this section ceases 
no later than December 31, 2009.''.

SEC. 6. DEFERRAL OF ALL FORECLOSURES ON ANY PRINCIPAL DWELLING OF A 
              CONSUMER FOR A 90-DAY PERIOD.

    (a) In General.--Notwithstanding any provision of any State or 
Federal law, after the date of the enactment of this Act, no creditor, 
servicer, or holder of such mortgage, or any other person acting on 
behalf of any such creditor, servicer, or holder, may take any action 
to initiate a foreclosure, whether judicial or nonjudicial, or any 
action in connection with a foreclosure already instituted other than 
to suspend such foreclosure, with respect to any eligible mortgage of a 
consumer, until the end of the 90-day period beginning on the date of 
the enactment of this Act.
    (b) Action by Consumer.--
            (1) In general.--After the date of the enactment of this 
        Act, any consumer shall have the right to defer any initiation 
        of a foreclosure, whether judicial or nonjudicial, or any 
        action in connection with a foreclosure already instituted, 
        including any foreclosure sale, with respect to any eligible 
        mortgage by any creditor, servicer, or holder of such mortgage, 
        or any other person acting on behalf of any such creditor, 
        servicer, or holder, until the end of the 90-day period 
        beginning on the date of the enactment of this Act.
            (2) Enforcement of right.--Any consumer may defend against 
        a foreclosure or bring an action in any court of competent or 
        general jurisdiction to compel compliance with the right of the 
        consumer under paragraph (1) to defer any initiation of a 
        foreclosure or any action in connection with a foreclosure 
        already instituted, including any foreclosure sale, with 
        respect to any eligible mortgage.
    (c) Rule of Construction.--No provision of this section shall be 
construed as affecting or altering the obligations of the consumer 
under the terms of the eligible mortgage notwithstanding any deferral 
of foreclosure.
    (d) Eligible Mortgage Defined.--For purposes of this section, the 
term ``eligible mortgage'' means any residential mortgage loan to any 
consumer that constitutes a first lien on the dwelling or real property 
securing the loan which constitutes, or on which is located, the 
principal residence of the consumer.
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