I 111th CONGRESS 2d Session H. R. 6431 IN THE HOUSE OF REPRESENTATIVES November 18, 2010 Mr. McDermott introduced the following bill; which was referred to the Committee on the Judiciary A BILL To amend title 11 of the United States Code to modify the application of chapter 13 with respect to principal residences that are the subject of foreclosure.

1.

Short title

This Act may be cited as the Protecting Homeowners and Foreclosure Stabilization Act of 2010.

2.

Preservation of stay of foreclosure of principal residence

Section 362(d) of title 11, the United States Code, is amended in paragraph (1) by inserting (excluding a stay of the foreclosure of the principal residence of the debtor) after stay the first place it appears.

3.

Authority to modify certain mortgages

Section 1322 of title 11, United States Code, is amended— (1)in subsection (b)— (A)by redesignating paragraph (11) as paragraph (12), (B)in paragraph (10) by striking and at the end, and (C)by inserting after paragraph (10) the following: (11)notwithstanding paragraph (2) and otherwise applicable nonbankruptcy law, with respect to a claim for a loan originated before the effective date of this paragraph and secured by a security interest in the debtor’s principal residence that is the subject of a notice that a foreclosure may be commenced with respect to such loan, modify the rights of the holder of such claim (and the rights of the holder of any claim secured by a subordinate security interest in such residence)— (A)if any applicable rate of interest is adjustable under the terms of such security interest by prohibiting, reducing, or delaying adjustments to such rate of interest applicable on and after the date of filing of the plan; (B)by modifying the terms and conditions of such loan to provide for the payment of interest accruing after the date of the order for relief under this chapter at a fixed annual rate equal to the currently applicable average prime offer rate as of the date of the order for relief under this chapter, corresponding to the repayment term determined under the preceding paragraph, as published by the Federal Financial Institutions Examination Council in its table entitled Average Prime Offer Rates—Fixed, plus a reasonable premium for risk; and (C)by providing for payments of such modified loan directly to the holder of such claim; and , and (2)by adding at the end the following: (g)A claim may be reduced under subsection (b)(11)(A) only on the condition that if the debtor sells the principal residence securing such claim, before receiving a discharge under this chapter and receives net proceeds from the sale of such residence, then the debtor agrees to pay to such holder if such residence is sold in the 10-year period beginning on the effective date of the plan, 30 percent of the capital gains, if any, as defined in section 1001 of the Internal Revenue Code of 1986. .

4.

Extended period for filing certain chapter 13 plans

If the debtor’s plan modifies the rights of a holder of a claim under section 1322(b)(11), then for purposes of rule 3015(b) of the Federal Rules of Bankruptcy Procedure a reference to 14 days shall be deemed to be a reference to 30 days.

5.

Exemption from counseling requirement

Section 109(h) of title 11, the United States Code, is amended— (1)in paragraph (1) by striking (2) and (3) and inserting (2), (3), (4), and (5); and (2)by adding at the end the following: (5)The requirements of paragraph (1) shall not apply with respect to a debtor whose principal residence is the subject of a notice of foreclosure (or similar notice under State law). .

6.

Requirement to request modification

Section 521(a) of title 11, the United States Code, is amended— (1)in paragraph (6) by striking and at the end, (2)in paragraph (7) by striking the period at the end, and (3)and inserting after paragraph (7) the following: (8)in a voluntary case under chapter 13 in which there is a debt secured by a lien on the principal residence of the debtor, certify under penalty of perjury that before the filing of the petition debtor requested that the holder of the claim for such debt modify such debt. .

7.

Rule of construction

Nothing in this Act or the amendments made by this Act shall be construed to modify any obligation of the Federal Housing Administration, the Veterans Administration, or the Department of Agriculture under a contract that guarantees or insures the payment of any part of a loan secured by a security interest in a principal residence.

8.

Effective date; application of amendments

(a)

Effective date

Except as provided in subsection (b), this and the amendments made by this shall take effect on the date of the enactment of this Act. (b)

Application of amendments

(1)

In general

Except as provided in paragraph (2), the amendments made by this Act shall apply with respect to cases commenced under title 11 of the United States Code before, on, or after the date of the enactment of this Act. (2)

Limitation

Paragraph (1) shall not apply with respect to cases closed under title 11 of the United States Code as of the date of the enactment of this Act that are neither pending on appeal in, nor appealable to, any court of the United States.