IB Union Calendar No. 5 111th CONGRESS 1st Session H. R. 788 [Report No. 111–13] IN THE HOUSE OF REPRESENTATIVES February 2, 2009 Mr. Kanjorski (for himself, Mr. Castle, and Mr. Frank of Massachusetts) introduced the following bill; which was referred to the Committee on Financial Services February 10, 2009 Additional sponsor: Mr. Capuano February 10, 2009 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed Strike out all after the enacting clause and insert the part printed in italic For text of introduced bill, see copy of bill as introduced on February 2, 2009 A BILL To provide a safe harbor for mortgage servicers who engage in specified mortgage loan modifications, and for other purposes.

1.

Servicer safe harbor

(a)

Safe Harbor

(1)

Loan modifications and workout plans

Notwithstanding 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 or workout plan 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)

Ability

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)

Criteria

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)

Applicability

This subsection shall apply only with respect to modifications, workouts, and other loss mitigation plans initiated before January 1, 2012. (b)

Reporting

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)

Definition of securitization vehicles

For purposes of this section, the term securitization vehicle means a trust, corporation, partnership, limited liability entity, special purpose entity, or other structure that— (1)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 (2)holds such mortgages.

February 10, 2009 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed