[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 61 Introduced in Senate (IS)]







111th CONGRESS
  1st Session
                                 S. 61

      To amend title 11 of the United States Code with respect to 
  modification of certain mortgages on principal residences, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 6, 2009

 Mr. Durbin (for himself, Mrs. Boxer, Mrs. Feinstein, Mr. Harkin, Mr. 
 Schumer, and Mr. Whitehouse) introduced the following bill; which was 
       read twice and referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
      To amend title 11 of the United States Code with respect to 
  modification of certain mortgages on principal residences, 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 ``Helping Families Save Their Homes in 
Bankruptcy Act of 2009''.

SEC. 2. ELIGIBILITY FOR RELIEF.

    Section 109 of title 11, United States Code, is amended--
            (1) by adding at the end of subsection (e) the following: 
        ``For purposes of this subsection, the computation of debts 
        shall not include the secured or unsecured portions of--
            ``(1) debts secured by the debtor's principal residence if 
        the current value of that residence is less than the secured 
        debt limit; or
            ``(2) debts secured or formerly secured by real property 
        that was the debtor's principal residence that was sold in 
        foreclosure or that the debtor surrendered to the creditor if 
        the current value of such real property is less than the 
        secured debt limit.''; and
            (2) by adding at the end of subsection (h) the following:
    ``(5) The requirements of paragraph (1) shall not apply in a case 
under chapter 13 with respect to a debtor who submits to the court a 
certification that the debtor has received notice that the holder of a 
claim secured by the debtor's principal residence may commence a 
foreclosure on the debtor's principal residence.''.

SEC. 3. PROHIBITING CLAIMS ARISING FROM VIOLATIONS OF CONSUMER 
              PROTECTION LAWS.

    Section 502(b) of title 11, United States Code, is amended--
            (1) in paragraph (8) by striking ``or'' at the end,
            (2) in paragraph (9) by striking the period at the end and 
        inserting ``; or'', and
            (3) by adding at the end the following:
            ``(10) the claim is subject to any remedy for damages or 
        rescission due to failure to comply with any applicable 
        requirement under the Truth in Lending Act, or any other 
        provision of applicable State or Federal consumer protection 
        law that was in force when the noncompliance took place, 
        notwithstanding the prior entry of a foreclosure judgment.''.

SEC. 4. AUTHORITY TO MODIFY CERTAIN MORTGAGES.

    Section 1322(b) of title 11, United States Code, is amended--
            (1) by redesignating paragraph (11) as paragraph (12),
            (2) in paragraph (10) by striking ``and'' at the end, and
            (3) by inserting after paragraph (10) the following:
            ``(11) notwithstanding paragraph (2) and otherwise 
        applicable nonbankruptcy law, with respect to a claim for a 
        loan secured by a security interest in the debtor's principal 
        residence that is the subject of a notice that a foreclosure 
        may be commenced, modify the rights of the holder of such 
        claim--
                    ``(A) by providing for payment of the amount of the 
                allowed secured claim as determined under section 
                506(a)(1);
                    ``(B) 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;
                    ``(C) by modifying the terms and conditions of such 
                loan--
                            ``(i) to extend the repayment period for a 
                        period that is no longer than the longer of 40 
                        years (reduced by the period for which such 
                        loan has been outstanding) or the remaining 
                        term of such loan, beginning on the date of the 
                        order for relief under this chapter; and
                            ``(ii) to provide for the payment of 
                        interest accruing after the date of the order 
                        for relief under this chapter at an annual 
                        percentage rate calculated at a fixed annual 
                        percentage rate, in an amount equal to the then 
                        most recently published annual yield on 
                        conventional mortgages published by the Board 
                        of Governors of the Federal Reserve System, as 
                        of the applicable time set forth in the rules 
                        of the Board, plus a reasonable premium for 
                        risk; and
                    ``(D) by providing for payments of such modified 
                loan directly to the holder of the claim; and''.

SEC. 5. COMBATING EXCESSIVE FEES.

    Section 1322(c) of title 11, the United States Code, is amended--
            (1) in paragraph (1) by striking ``and'' at the end,
            (2) in paragraph (2) by striking the period at the end and 
        inserting a semicolon, and
            (3) by adding at the end the following:
            ``(3) the debtor, the debtor's property, and property of 
        the estate are not liable for a fee, cost, or charge that is 
        incurred while the case is pending and arises from a debt that 
        is secured by the debtor's principal residence except to the 
        extent that--
                    ``(A) the holder of the claim for such debt files 
                with the court (annually or, in order to permit filing 
                consistent with clause (ii), at such more frequent 
                periodicity as the court determines necessary) notice 
                of such fee, cost, or charge before the earlier of--
                            ``(i) 1 year after such fee, cost, or 
                        charge is incurred; or
                            ``(ii) 60 days before the closing of the 
                        case; and
                    ``(B) such fee, cost, or charge--
                            ``(i) is lawful under applicable 
                        nonbankruptcy law, reasonable, and provided for 
                        in the applicable security agreement; and
                            ``(ii) is secured by property the value of 
                        which is greater than the amount of such claim, 
                        including such fee, cost, or charge;
            ``(4) the failure of a party to give notice described in 
        paragraph (3) shall be deemed a waiver of any claim for fees, 
        costs, or charges described in paragraph (3) for all purposes, 
        and any attempt to collect such fees, costs, or charges shall 
        constitute a violation of section 524(a)(2) or, if the 
        violation occurs before the date of discharge, of section 
        362(a); and
            ``(5) a plan may provide for the waiver of any prepayment 
        penalty on a claim secured by the debtor's principal 
        residence.''.

SEC. 6. CONFIRMATION OF PLAN.

    Section 1325(a) of title 11, the United States Code, is amended--
            (1) in paragraph (8) by striking ``and'' at the end,
            (2) in paragraph (9) by striking the period at the end and 
        inserting a semicolon, and
            (3) by inserting after paragraph (9) the following:
            ``(10) notwithstanding subclause (I) of paragraph 
        (5)(B)(i), the plan provides that the holder of a claim whose 
        rights are modified pursuant to section 1322(b)(11) retain the 
        lien until the later of--
                    ``(A) the payment of such holder's allowed secured 
                claim; or
                    ``(B) discharge under section 1328; and
            ``(11) the plan modifies a claim in accordance with section 
        1322(b)(11), and the court finds that such modification is in 
        good faith.''.

SEC. 7. DISCHARGE.

    Section 1328 of title 11, the United States Code, is amended--
            (1) in subsection (a)--
                    (A) by inserting ``(other than payments to holders 
                of claims whose rights are modified under section 
                1322(b)(11)'' after ``paid'' the 1st place it appears, 
                and
                    (B) in paragraph (1) by inserting ``or, to the 
                extent of the unpaid portion of an allowed secured 
                claim, provided for in section 1322(b)(11)'' after 
                ``1322(b)(5)'', and
            (2) in subsection (c)(1) by inserting ``or, to the extent 
        of the unpaid portion of an allowed secured claim, provided for 
        in section 1322(b)(11)'' after ``1322(b)(5)''.

SEC. 8. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

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