[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1567 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                H. R. 1567

 To amend the Real Estate Settlement Procedures Act of 1974 to require 
   mortgagees for mortgages in default to engage in reasonable loss 
             mitigation activities, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 14, 2011

  Ms. Waters introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
 To amend the Real Estate Settlement Procedures Act of 1974 to require 
   mortgagees for mortgages in default to engage in reasonable loss 
             mitigation activities, 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 ``Foreclosure Prevention and Sound 
Mortgage Servicing Act of 2011''.

SEC. 2. DUTY TO ENGAGE IN LOSS MITIGATION.

    (a) Duty.--The Real Estate Settlement Procedures Act of 1974 is 
amended by inserting after section 6 (12 U.S.C. 2605) the following new 
section:

``SEC. 6A. DUTY TO ENGAGE IN LOSS MITIGATION.

    ``(a) Duty for Covered Federally Related Mortgage Loans.--
            ``(1) Duty.--Upon default of any federally related mortgage 
        loan that is secured by a lien on the principal residence of 
        the borrower or mortgagor, the mortgagee shall engage in 
        reasonable loss mitigation activities that provide for--
                    ``(A) the long-term affordability of the loan; and
                    ``(B) the maximum retention of home equity.
            ``(2) Responsibilities by lienholders.--With respect to a 
        default referred to in paragraph (1):
                    ``(A) Senior lien.--The mortgagee of the senior 
                lien on the residence shall have primary responsibility 
                for the loss mitigation activities required under such 
                paragraph.
                    ``(B) Subordinate liens.--The mortgagee of any 
                subordinate lien shall refrain from interfering with or 
                inhibiting the modification of the senior lien and 
                shall comply with the rules prescribed in subsection 
                (g) to modify the subordinate lien.
    ``(b) No Foreclosure Without Loss Mitigation.--
            ``(1) Prohibition.--No foreclosure of any covered federally 
        related mortgage loan shall be initiated, continued, or 
        completed if the mortgagee or servicer has at any time failed 
        to comply with the requirements of this section with respect to 
        such loan.
            ``(2) Certification of loss mitigation activities.--
                    ``(A) Precondition to sale.--The filing of a 
                certification of loss mitigation activities with 
                respect to a covered federally related mortgage loan 
                shall be a condition precedent--
                            ``(i) to any valid sale pursuant to 
                        foreclosure of the principal residence that is 
                        subject the lien securing the loan; and
                            ``(ii) to the filing of any action to 
                        recover possession of the residence by the 
                        purchaser at such a sale.
                    ``(B) Filing.--In the case of a residence that is 
                subject to a lien securing a covered federally related 
                mortgage loan, after foreclosure on such loan, the 
                State or local government official responsible for 
                recording deeds and other transfers of real property in 
                the jurisdiction in which the residence is located 
                shall not record, nor permit the recordation of, any 
                deed transferring title to such residence unless such 
                official certifies that--
                            ``(i) that this section does not apply to 
                        such federally related mortgage loan; or
                            ``(ii) the party conducting the sale or 
                        transfer has demonstrated that the requirements 
                        of this section have been met.
                    ``(C) Form and content.--The Director of the Bureau 
                of Consumer Financial Protection of the Federal Reserve 
                System shall, by regulation, provide for the form and 
                content of a certification pursuant to this paragraph.
            ``(3) Voidance of sale.--Notwithstanding any other 
        provision of Federal or State law or any contract, a sale or 
        other transfer of property in violation of this subsection 
        shall be null and void.
    ``(c) Loss Mitigation Activities.--
            ``(1) In general.--For purposes of this section, loss 
        mitigation activities shall include--
                    ``(A) priority loss mitigation activities under 
                paragraph (5);
                    ``(B) secondary loss mitigation activities under 
                paragraph (6); and
                    ``(C) last-resort loss mitigation activities under 
                paragraph (7).
            ``(2) Order of pursuit.--In complying with subsection (a), 
        the mortgagee or servicer shall pursue loss mitigation 
        activities in the following order: first priority loss 
        mitigation activities, then secondary loss mitigation 
        activities, and then last-resort loss mitigation activities. If 
        any loss mitigation activity is taken, the mortgagee or 
        servicer shall provide written notice of such activity to the 
        borrower or mortgagor by mail not later than 7 business days 
        after such action is taken.
            ``(3) Consideration of circumstances in provision of loss 
        mitigation activities.--
                    ``(A) Determination.--In determining the type of 
                loss mitigation activity to provide with respect to a 
                covered federally related mortgage loan, the mortgagee 
                or servicer shall consider the nature of the financial 
                hardship experienced by the borrower or mortgagor and 
                whether such hardship is a temporary hardship. The 
                Director shall, by regulation, define `hardship' and 
                `temporary hardship' for purposes of this subsection.
                    ``(B) Actions based on circumstances.--The 
                mortgagee or servicer shall provide--
                            ``(i) priority loss mitigation activities 
                        with respect to borrowers and mortgagees--
                                    ``(I) who cannot make scheduled 
                                payments due under the loan or other 
                                payments due to financial hardship; and
                                    ``(II) for whom providing such loss 
                                mitigation activities are consistent 
                                with maximizing net present value of 
                                the loan (as determined in accordance 
                                with subsection (d)(4));
                            ``(ii) secondary loss mitigation activities 
                        with respect to borrowers or mortgagors who 
                        have experienced a change in their financial 
                        condition that has resulted in temporary 
                        financial hardship; and
                            ``(iii) last-resort loss mitigation 
                        activities with respect to borrowers or 
                        mortgagors who, notwithstanding priority or 
                        secondary loss mitigation activities taken with 
                        respect to the mortgage, will be unable to make 
                        payments due under the loan.
            ``(4) Prohibitions.--A mortgagee or servicer with respect 
        to a covered federally related mortgage loan--
                    ``(A) may not limit the number of loss mitigation 
                activities provided with respect to a borrower or 
                mortgagor if such activities are provided in connection 
                with financial hardships of differing natures, but may 
                limit the number of loss mitigation activities provided 
                with respect to a borrower or mortgagor pursuant to 
                recurring financial hardships of the same nature;
                    ``(B) shall comply with the requirements of under 
                this section with respect to the loan without regard to 
                whether there has been a previous default under the 
                loan; and
                    ``(C) initiate foreclosure proceedings while 
                simultaneously providing loss mitigation activities to 
                a borrower or mortgagor; and
                    ``(D) assess fees for the provision of loss 
                mitigation services, notwithstanding the fees permitted 
                under section 128B of the Truth in Lending Act.
            ``(5) Priority loss mitigation activities.--For purposes of 
        this section, the term `priority loss mitigation activities' 
        includes, with respect to a covered federally related mortgage 
        loan, activities that preserve the borrower's or mortgagor's 
        ownership interest in the property that is subject to the lien 
        securing the loan by modifying the contractual terms of the 
        loan. Priority loss mitigation activities include modification 
        of the loan terms that provide for the following:
                    ``(A) Alteration of terms.--Reduction of the 
                interest rate of the loan, forgiveness of loan 
                principal or interest, conversion from an adjustable 
                rate mortgage to a fixed rate mortgage, and 
                reamortization of the loan in connection with an 
                extension of the final maturity date of the loan such 
                that the total term of the loan does not exceed 40 
                years.
                    ``(B) Short refinancing.--Short refinancing of the 
                loan consisting of acceptance of payment from or on 
                behalf of the borrower or mortgagor of an amount that 
                is less than the full amount alleged to be due and 
                owing under the loan, including principal, interest, 
                and fees, in full satisfaction of the obligation under 
                the loan and as part of a refinance transaction under 
                which the property that is subject to the lien securing 
                the loan is intended to remain the principal residence 
                of the borrower or mortgagor.
        In the case of priority loss mitigation activities, the 
        mortgagee or servicer shall waive any late payment charge, 
        penalty interest, or any other fees or charges, including legal 
        fees, or any combination thereof, that would otherwise apply to 
        the loan.
            ``(6) Secondary loss mitigation activities.--For purposes 
        of this section, the term `secondary loss mitigation 
        activities' includes, with respect to a covered federally 
        related mortgage loan, other activities that avoid foreclosure 
        and preserve the borrower's or mortgagor's ownership interest 
        in the property that is subject to the lien securing the loan, 
        but do not change the contractual terms of the loan. Secondary 
        loss mitigation activities include the following activities:
                    ``(A) Waiver of any late payment charge, penalty 
                interest, or any other fees or charges, including legal 
                fees, or any combination thereof.
                    ``(B) Establishment of a repayment plan under which 
                the borrower or mortgagor resumes regularly scheduled 
                payments and pays additional amounts at scheduled 
                intervals to cure the delinquency.
                    ``(C) Forbearance under the loan that provides for 
                a temporary reduction in, or cessation of, monthly 
                payments followed by a reamortization of the amounts 
                due under the loan, including arrearage, and a new 
                schedule of repayment amounts.
            ``(7) Last-resort loss mitigation activities.--For purposes 
        of this section, the term `last-resort loss mitigation 
        activities' includes, with respect to a covered federally 
        related mortgage loan, activities that avoid foreclosure but do 
        not preserve the borrower's or mortgagor's ownership interest 
        in the property that is subject to the lien securing the loan. 
        Last-resort loss mitigation activities include the following 
        activities:
                    ``(A) Short sale of the principal residence that is 
                subject to the lien securing the loan, consisting of 
                acceptance of payment from or on behalf of the borrower 
                or mortgagor of an amount less than the amount alleged 
                to be due and owing under the loan, including 
                principal, interest, and fees, in full satisfaction of 
                the obligation under such loan and as part of a sale 
                transaction in which the property is not intended to 
                remain the principal residence of the borrower or 
                mortgagor.
                    ``(B) Assumption of the borrower's obligations 
                under the loan by a third party.
                    ``(C) Cancellation or postponement of a foreclosure 
                sale to allow the borrower or mortgagor additional time 
                to sell the property.
                    ``(D) Acquisition of the property by the mortgagee 
                or servicer by deed in lieu of foreclosure.
            ``(8) Limitations on loss mitigation.--
                    ``(A) Annual certifications of income.--A borrower 
                or mortgagor under a covered federally related mortgage 
                loan who has received loss mitigation activities 
                provided under this section shall annually provide a 
                certification of the income of such borrower or 
                mortgagor to the servicer or mortgagee of the loan. The 
                servicer or mortgagee under the loan may increase the 
                monthly payment due under the loan from the borrower or 
                mortgagee if such certification reveals that the income 
                of such borrower or mortgagee has increased, except 
                such increase in payment due may not exceed an amount 
                that is commensurate with such increase in income.
                    ``(B) No obligation to modify fraudulent loans.--
                Subsections (a) and (b) shall not apply with respect to 
                a covered federally related mortgage loan if the 
                borrower or mortgagor under the loan committed fraud by 
                providing false or misleading information in connection 
                with the loss mitigation activities for the loan. This 
                subparagraph may not be construed to exempt subsections 
                (a) and (b) from applying to any loan because of any 
                fraud committed by the originator of the loan during 
                the application and approval process for the loan.
    ``(d) Affordable Payments.--
            ``(1) Consideration in reasonability of loss mitigation 
        activities.--The affordability of any scheduled payments due 
        from the borrower or mortgagor under a covered federally 
        related mortgage loan pursuant to loss mitigation activities 
        for the loan and whether the activities are in the best 
        financial interests of the borrower or mortgagor shall be taken 
        into consideration in determining whether a mortgagee has 
        engaged, for purposes of subsection (a)(1), in reasonable loss 
        mitigation activities that provide for long-term affordability 
        of the loan.
            ``(2) Affordability.--
                    ``(A) In general.--Payments under a loan shall be 
                considered to be affordable for a borrower or mortgagor 
                for purposes of this subsection if such payments do not 
                cause the total monthly debts of the borrower or 
                mortgagor, including amounts due under the loan, to 
                exceed--
                            ``(i) a percentage established by the 
                        Director, by regulation, of the monthly gross 
                        income of the borrower or mortgagor; or
                            ``(ii) such other maximum percentage of 
                        such income as the Director may establish, by 
                        regulation, which regulations shall take into 
                        consideration the amount of income of the 
                        borrower or mortgagor available to pay regular 
                        expenses after payment of all installment and 
                        revolving debt.
                    ``(B) Underwater loans.--Notwithstanding 
                subparagraph (A), payments under a loan having a loan-
                to-value ratio that exceeds 100 percent shall not be 
                considered to be affordable for a borrower or mortgagor 
                for purposes of this subsection unless the amount of 
                the remaining principal balance on such loan that 
                exceeds 100 percent is reduced.
            ``(3) Income used in determining affordability.--
                    ``(A) Documentation.--A mortgagee or servicer shall 
                request documentation of the income of a borrower or 
                mortgagor before commencing loss mitigation activities.
                    ``(B) Verification.--The borrower's or mortgagor's 
                income shall be verified by--
                            ``(i) the Federal wage and tax statement 
                        (Form W-2 of the Internal Revenue Service) of 
                        the borrower or mortgagor; or
                            ``(ii) tax returns, payroll receipts, 
                        financial institution records, or other third-
                        party documents that provide reasonably 
                        reliable evidence of the income or assets of 
                        the borrower or mortgagor.
            ``(4) Standard net present value test.--
                    ``(A) Test.--Upon the request of a borrower or 
                mortgagor under a covered federally related mortgage 
                loan who is qualified for loss mitigation activities 
                under this section, the mortgagee or servicer under the 
                loan shall perform a standard test to compare the 
                expected net present value of modifying the loan to the 
                net present value of foreclosing on such loan.
                    ``(B) Effect.--If application of the standard test 
                referred to in subparagraph (A) to a covered federally 
                related mortgage loan shows that the net present value, 
                to the mortgagee or in the aggregate, of modifying the 
                loan exceeds the net present value of foreclosing on 
                the loan, all persons that hold an interest in the 
                mortgage agreement shall agree to modify such loan in a 
                manner as the Bureau has prescribed.
                    ``(C) Components.--The Director shall, by 
                regulation, establish the components of the standard 
                test for purposes of subparagraph (A), which shall 
                not--
                            ``(i) prohibit the modification of 
                        negatively amortizing loans;
                            ``(ii) prohibit the modification of loans 
                        with negative equity; or
                            ``(iii) prohibit the modification of loans 
                        to minority and low-income borrowers or 
                        mortgagors.
            ``(5) Debt-to-income ratio.--In determining the debt-to-
        income ratio or residual income of a mortgagor or borrower 
        under a covered federally related mortgage loan for purposes of 
        this subsection, the amount of monthly payment under the loan 
        shall include principal, interest, taxes, insurance, flood 
        insurance, any homeowner's association and condominium fees, 
        and any second or subordinate liens.
            ``(6) Monthly income.--In determining monthly income of a 
        mortgagor or borrower for purposes of this subsection, all 
        wages, salary, overtime, fees, commissions, tips, Social 
        Security benefits, pensions, and all other income shall be 
        considered.
            ``(7) Written notification of affordability calculation.--
        The mortgagee or servicer shall notify the borrower or 
        mortgagor in writing of the results of the determination of 
        affordability under this subsection and the income on which the 
        determination was based. Such written notice shall be provided 
        by mail not later than 7 business days after such action is 
        taken or as part of the written notice required under 
        subsection (c)(2), whichever is earlier.
    ``(e) Explanation of Denial.--A mortgagee or servicer under a 
covered federally related mortgage loan shall provide, to each borrower 
or mortgagor who has requested loss mitigation activities under this 
section and been denied the provision of such activities by the 
mortgagee or servicer, an explanation of why such activities were 
denied and the eligibility standards used by such mortgagee or servicer 
in assessing the provision of loss mitigation activities.
    ``(f) Presumption of Compliance.--An offer, made by a mortgagee or 
servicer under a covered federally related mortgage loan to a borrower 
or mortgagor, of a priority loss mitigation alternative that is in 
compliance with the requirements under subsection (d) (relating to 
affordable payments) and any regulations carrying out such subsection 
shall be presumed to constitute compliance with the requirement to 
perform reasonable loss mitigation under subsection (a) with respect to 
the loan.
    ``(g) Subordinate Liens.--
            ``(1) Information sharing.--Each mortgagee with respect to 
        a subordinate lien shall provide to any mortgagee holding a 
        senior lien under a covered federally related mortgage loan 
        information needed by such senior mortgagees to engage in 
        reasonable loss mitigation as required by this section with 
        respect.
            ``(2) Maintenance of lien status.--Any priority loss 
        mitigation activity under subsection (c)(5) undertaken with 
        respect to a senior lien as part of loss mitigation activity 
        shall not impair the priority status of liens under the 
        modified loan, to the extent that there are no additional funds 
        advanced to the borrower in connection with such priority loss 
        mitigation activity.
            ``(3) Automatic modification upon modification of senior 
        lien.--Upon the provision of loss mitigation activities in 
        accordance with this Act by the holder of a senior lien, a 
        mortgagee with respect to a subordinate lien shall modify such 
        lien in proportion to the modification of the senior lien.
            ``(4) Underwater subordinate liens.--If the combined loan-
        to-value ratio under the covered federally related mortgage 
        loan secured by the senior lien and any loans secured by 
        subordinate liens exceeds 100 percent, the mortgagee of each 
        such subordinate lien shall perform one or more of the 
        following actions:
                    ``(A) Reduce the principal amount on such lien to 
                an amount that results in a total loan-to-value ratio 
                of not more than 100 percent when combined with the 
                primary lien.
                    ``(B) Release the residential real property that is 
                subject to such subordinate lien from the subordinate 
                lien.
    ``(h) Direct Access to Authorized Loss Mitigation Personnel.--
            ``(1) Provision of contact information.--The mortgagee or 
        servicer of a covered federally related mortgage loan shall 
        provide, on each regular account statement for the loan, a 
        toll-free or collect-call telephone number that provides the 
        borrower with direct access to a person with the information 
        and authority to answer questions and fully resolve issues 
        related to loss mitigation activities for the loan.
            ``(2) Requirement of single point of contact.--
                    ``(A) Requirement.--For any borrower or mortgagor 
                that contacts a mortgagee or servicer through the 
                telephone number provided pursuant to paragraph (1) or 
                through any other means, the mortgagee or servicer 
                shall assign to such borrower or mortgagor a single 
                point of contact that will personally and primarily 
                assist such borrower or mortgagor with the resolution 
                or implementation of loss mitigation activities 
                requested by such borrower or mortgagor.
                    ``(B) Definition.--For purposes of this paragraph 
                the term `single point of contact' means an individual 
                employed by a servicer with specialized training in 
                loss mitigation and customer service who serves as the 
                primary point of contact for any negotiations, 
                questions, or other informational needs a for borrower 
                or mortgagor who has requested loss mitigation.
            ``(3) Prohibition on outsourcing.--In carrying out 
        subsection (a) with respect to a covered federally related 
        mortgage loan, any contact by or on behalf of a mortgagee or 
        servicer with the homeowner and any processing of any loss 
        mitigation activities shall be conducted only by agents of the 
        mortgagee or servicer who are physically located in the United 
        States.
    ``(i) Third-Party Loan Modifications.--The mortgagee or servicer of 
a covered federally related mortgage loan shall not accept or provide 
loss mitigation activities with respect to such loan at the request of 
any entity or individual that is not party to the loan unless--
            ``(1) the entity or individual is authorized by the 
        borrower or mortgagee to act on behalf of the borrower or 
        mortgagor; and
            ``(2)(A) is a representative of a housing counseling agency 
        approved by the Secretary of Housing and Urban Development; or
            ``(B) provides documentation to the servicer or mortgagee 
        that the entity or individual--
                    ``(i) has not charged any fee to the borrower or 
                mortgagor for such request; or
                    ``(ii)(I) has charged a nominal fee for such 
                request;
                    ``(II) has entered into a written contract, in 
                plain English or the primary language of the borrower 
                or mortgagor, with the borrower or mortgagor, that 
                includes provisions for cancellation without penalty; 
                and
                    ``(III) will refund any such fees to the borrower 
                or mortgagor in the event the request for loss 
                mitigation is denied.
    ``(j) Duty to Refer to HUD-Certified Housing Counseling Agency.--
            ``(1) Referral by servicer or mortgagee.--In the case of 
        any payment due under a covered federally related mortgage loan 
        that is more than 60 days late, the servicer or mortgagee shall 
        forward to a housing counseling agency approved by the 
        Secretary of Housing and Urban Development the contact 
        information of the borrower.
            ``(2) Expression of borrower preference.--The borrower may 
        communicate to the servicer or mortgagee a preference for a 
        particular housing counseling agency approved by the Secretary 
        of Housing and Urban Development--
                    ``(A) in writing at the time of closing on the 
                loan; or
                    ``(B) in writing at any time during the term of the 
                loan, including by conveyance of signed authorization 
                form from the approved housing counseling agency of the 
                borrower's choice, which shall be transmitted by such 
                agency to the mortgagee or servicer.
            ``(3) Referral relationship.--A mortgagee or servicer may 
        establish a referral relationship with a housing counseling 
        agency approved by the Secretary of Housing and Urban 
        Development, but such relationship may not be exclusive and the 
        mortgagee or servicer may not refuse to respond to qualified 
        written requests and other communications from another housing 
        counseling agency approved by the Secretary of Housing and 
        Urban Development or any other agent that is authorized by the 
        borrower.
    ``(k) Prohibition on Waiver of Rights.--A mortgagee for a covered 
federally related mortgage loan may not--
            ``(1) when engaging in loss mitigation activities pursuant 
        to subsection (a), require a borrower to limit or waive the 
        rights of such borrower to bring any claims, defenses, demands, 
        proceedings, actions, or causes of action against the mortgagee 
        or servicer as a condition of accepting an offer of any loss 
        mitigation activities, including any activities under 
        subsection (c); or
            ``(2) require the borrower to agree to arbitration as a 
        condition of receiving loan modification activities.
Any waiver or arbitration provision in a written agreement prohibited 
under this subsection shall be void and unenforceable.
    ``(l) Short Sale and Deed-in-Lieu of Foreclosure Protections.--
            ``(1) Right to sell.--If a borrower or mortgagor under a 
        covered federally related mortgage loan presents documentation 
        to the mortgagee or servicer of such loan an objective 
        circumstance under paragraph (2) that supports a request of the 
        borrower or mortgagor for the immediate sale of the property 
        subject to the loan, the mortgagee or servicer shall not 
        prevent or otherwise interfere with the borrower or mortgagor 
        from selling the property subject to such loan for an amount 
        that is less than the amount owed to such mortgagee or 
        servicer.
            ``(2) Objective circumstance.--Only the following objective 
        circumstances may be considered by the mortgagee or servicer, 
        for purposes of paragraph (1), in determining whether an 
        immediate sale of the property subject to the loan is required:
                    ``(A) A member of the household of the borrower or 
                mortgagor has obtained a new job.
                    ``(B) A member of the household of the borrower or 
                mortgagor is attending a new school.
                    ``(C) The health and well-being of a member of the 
                household of the borrower or mortgagor.
            ``(3) Prohibition on demand payments.--In any case in which 
        an immediate sale of a property is determined under paragraph 
        (1) to be required, the mortgagee or servicer for the covered 
        federally related mortgage loan, or any agent thereof, shall 
        not demand an additional payment from the borrower or 
        mortgagor, or any agent thereof, or a potential purchaser of 
        the property as a condition of allowing the sale of the 
        property to occur.
            ``(4) Right to recapture.--This Act may not be construed to 
        prevent, in the case of any immediate sale pursuant to 
        paragraph (1), a mortgagee or servicer from recovering after 
        such sale from the mortgagee or borrower, to the extent 
        provided under State law, the difference between the amount 
        owed under the covered federally related mortgage loan and the 
        sale price of the property.
    ``(m) Reporting on Loss Mitigation Activities.--
            ``(1) In general.--Each mortgagee or servicer of a covered 
        federally related mortgage loan shall report monthly and 
        comprehensively to the Comptroller of the Currency, the 
        Director, and the Board of Governors of the Federal Reserve 
        System on the extent and scope of the loss mitigation 
        activities of the mortgagee. Each such report shall include 
        data on loss mitigation activities disaggregated according to 
        the categories specified in each of the subparagraphs of 
        paragraphs (5), (6), and (7) of subsection (c), any loss 
        mitigation activities not covered by such categories, the 
        number of loans receiving loss mitigation that have become 
        performing loans, the number of loans receiving loss mitigation 
        that have proceeded to foreclosure, the total number of 
        foreclosures initiated during the reporting period, and such 
        other information as the Comptroller, the Director, or the 
        Board of Governors determines to be relevant.
            ``(2) Compilation of aggregate data.--
                    ``(A) Commencement.--Beginning with data for 
                calendar year 2012, the Comptroller of the Currency 
                shall, in consultation with the Director and the 
                Chairman of the Board of Governors of the Federal 
                Reserve System, compile for each year, for each primary 
                metropolitan statistical area, metropolitan statistical 
                area, and consolidated metropolitan statistical area 
                that is not comprised of designated primary 
                metropolitan statistical areas, aggregate data by 
                census tract for each mortgagee or servicer that is 
                required to disclose data under this subsection.
                    ``(B) Scope.--Each such report shall include loan-
                level disclosures of outstanding loans with information 
                related to--
                            ``(i) the location of the security 
                        property;
                            ``(ii) the loan amount;
                            ``(iii) the value of such security 
                        property;
                            ``(iv) the age of borrower or mortgagee;
                            ``(v) the date on which such loan was 
                        originated;
                            ``(vi) the type of entity owning such loan;
                            ``(vii) the performance status of such 
                        loan;
                            ``(viii) the monetary losses incurred by 
                        the investor in such loan in connection with 
                        the termination of such loan;
                            ``(ix) the loss mitigation activities 
                        provided in reference to such loan according to 
                        the categories specified in each of the 
                        subparagraphs of paragraphs (5), (6), and (7) 
                        of subsection (c);
                            ``(x) the loss mitigation activities 
                        provided in reference to such loan that are not 
                        covered by such categories;
                            ``(xi) the magnitude of such modification 
                        or loss mitigation activities;
                            ``(xii) the dates of consideration, 
                        approval, or rejection of such loss mitigation 
                        activities;
                            ``(xiii) the reasons for such rejection; 
                        and
                            ``(xiv) any other relevant information.
                Such reports shall also include information identical 
                to that required upon loan origination by the Home 
                Mortgage Disclosure Act of 1975.
                    ``(C) Data tables.--The Comptroller, in 
                consultation with the Director and the Chairman of the 
                Board of Governors of the Federal Reserve System, shall 
                also produce tables indicating for each primary 
                metropolitan statistical area, metropolitan statistical 
                area, and consolidated metropolitan statistical area 
                that is not comprised of designated primary 
                metropolitan statistical areas, aggregate loss 
                mitigation patterns for various categories of census 
                tracts grouped according to location, age of housing 
                stock, income level, and racial and ethnic 
                characteristics.
                    ``(D) Availability to public.--The data and tables 
                required pursuant to this paragraph shall be made 
                available to the public not later than 6 months after 
                such data is reported pursuant to subparagraph (A).
    ``(n) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Covered federally related mortgage loan.--The term 
        `covered federally related mortgage loan' means a federally 
        related mortgage loan described in subsection (a).
            ``(2) Director.--The term `Director' means the Director of 
        the Bureau of Consumer Financial Protection of the Federal 
        Reserve System.
            ``(3) Mortgagee.--The term `mortgagee' means, with respect 
        to a federally related mortgage loan, the original lender under 
        the loan and any affiliates, agents, subsidiaries, successors, 
        or assignees of such lender, and any subsequent purchaser, 
        trustee, or transferee of the loan or credit instrument issued 
        by such lender.
            ``(4) Servicer.--The term `servicer' has the meaning given 
        such term in section 6(i).
            ``(5) Subordinate lien.--The term `subordinate lien' means, 
        with respect to a covered federally related mortgage loan, a 
        lien that--
                    ``(A) is an interest on the same property that is 
                subject to the lien that secures the covered federally 
                related mortgage loan; and
                    ``(B) has subordinate priority to the lien that 
                secures the covered federally related mortgage loan.
    ``(o) Report to Congress.--Not later than the expiration of the 12-
month period beginning upon the date of the enactment of the 
Foreclosure Prevention and Sound Mortgage Servicing Act of 2011, and of 
each consecutive 12-month period thereafter, the Comptroller of the 
Currency, in consultation with the Director and the Chairman of the 
Board of Governors of the Federal Reserve System, shall provide a 
report to the Congress on the extent of compliance by mortgagees and 
servicers with the requirements of this section and paragraphs (4) 
through (7) of section 6(e).
    ``(p) Coordination With State Law.--
            ``(1) In general.--No provision of this section shall be 
        construed as annulling, altering, or affecting the laws of any 
        State relating to deferment of foreclosures, except to the 
        extent that such State laws are inconsistent with the 
        provisions of this section, and then only to the extent of such 
        inconsistency.
            ``(2) Standard for inconsistency.--A State law shall not be 
        considered to be inconsistent with this section if the 
        protection such State law affords any consumer is greater than 
        the protection afforded by this section.
    ``(q) Rule of Construction.--Nothing in this section may be 
construed to prohibit any mortgagee or servicer of a covered federally 
related mortgage loan from providing a loan modification that exceeds 
the standards established by the regulations issued pursuant to 
subsection (r).
    ``(r) Regulations.--The Director shall issue regulations to carry 
out this section. Such regulations shall be issued not later than the 
expiration of the 180-day period beginning upon the date of the 
enactment of the Foreclosure Prevention and Sound Mortgage Servicing 
Act of 2011.''.
    (b) Duty of Loan Servicer To Respond to Borrower Inquiries.--
Section 6(e) of the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2605(e)) is amended--
            (1) in paragraph (1), by striking subparagraph (A) and 
        inserting the following:
                    ``(A) In general.--If any servicer of a federally 
                related mortgage loan receives a qualified written 
                request from the borrower, an agent of the borrower, or 
                a housing counseling agency approved by the Secretary 
                of Housing and Urban Development for information 
                relating to the servicing of such loan (including 
                documents executed at the time the loan was consummated 
                or other documents related to the loan), the servicer 
                shall take action with respect to such inquiry as 
                specified in paragraph (2).'';
            (2) in paragraph (2), in the matter preceding subparagraph 
        (A), by striking ``60 days'' and all that follows through ``any 
        borrower'' and inserting the following: ``14 calendar days 
        after the receipt from any borrower, borrower's agent, or 
        housing counseling agency approved by the Secretary of Housing 
        and Urban Development''; and
            (3) in paragraph (3), by striking ``60-day'' and inserting 
        ``14-day''.
    (c) Comprehensive Disclosure and Fair Processing of Qualified 
Written Requests.--Section 6(e) of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2605(e)) is amended by adding at the 
end the following new paragraphs:
            ``(4) Provision of information regarding mortgage.--The 
        servicer of a covered federally related mortgage loan (as such 
        term is defined in section 6A(n)) shall have available at all 
        times the following information, which shall be provided to the 
        borrower or borrower's agent in response to a qualified written 
        request by the borrower submitted in accordance with the 
        deadlines set forth in paragraph (1)(A):
                    ``(A) Whether the account relating to such loan is 
                current, or if not, the date the account went into 
                default.
                    ``(B) The current balance due on the loan, 
                including the amount of principal due, an itemization 
                of all fees due, an explanation of the escrow balance, 
                and whether there are any escrow deficiencies or 
                shortages.
                    ``(C) A full payment history that shows, in a clear 
                and easily understandable manner, all of the activity 
                on the loan since the origination of the loan, 
                including the escrow account, and the application of 
                payments made under the loan.
                    ``(D) The initial terms of the loan.
                    ``(E) A copy of the original note and security 
                instrument.
                    ``(F) Identification of the owner of the mortgage 
                note and any investors in the note.
                    ``(G) Any documents that limit, explain, or modify 
                the loss mitigation activities offered by the servicer.
                    ``(H) Any other information requested by the 
                borrower that is reasonably related to loss mitigation 
                activities.
                    ``(I) Documents executed at the time the loan was 
                consummated or other documents related to the loan.
            ``(5) Prohibition of `wrong door' actions for qualified 
        written requests.--All written communications from the 
        mortgagee or servicer of a federally related mortgage loan to 
        the borrower shall include the address for receipt and handling 
        of qualified written requests. Any qualified written request 
        received by the mortgagee or servicer shall be valid 
        notwithstanding receipt at any address other than that 
        designated by the mortgagee or servicer for receipt and 
        handling of such requests.
            ``(6) Prohibition of fee for response to qualified written 
        requests.--A mortgagee or servicer for a federally related 
        mortgage loan may not impose any fee for, or on account of, the 
        preparation and submission by such mortgagee or servicer of any 
        response or statement required by this subsection.
            ``(7) Prohibition of foreclosure pending disclosure.--In 
        the case of a covered federally related mortgage loan (as such 
        term is defined in section 6A(n)), no foreclosure proceeding 
        may be initiated or continued against the borrower or the 
        principal residence of the borrower during any period in which 
        a qualified written request under this subsection is pending 
        and the mortgagee or servicer has not complied with the 
        requirements of this subsection regarding the request.''.
    (d) Damages and Costs.--Section 6(f) of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2605(f)) is amended--
            (1) in the matter preceding paragraph (1), by inserting 
        ``or of section 6A'' after ``this section'';
            (2) in paragraphs (1)(B) and (2)(B)--
                    (A) by striking ``a pattern or practice'' each 
                place such term appears; and
                    (B) by striking ``$1,000'' each place such term 
                appears and inserting ``$2,000 for each violation''; 
                and
            (3) in paragraph (2)(B)(i), by striking ``$500,000'' and 
        inserting ``$1,000,000''.
    (e) Conforming Amendment.--Section 17 of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2615) is amended by striking 
``Nothing'' and inserting ``Except as provided in sections 6(e)(7) and 
6A, nothing''.

SEC. 3. DUTIES OF LENDERS AND LOAN SERVICERS.

    The Truth in Lending Act is amended by inserting before section 130 
(15 U.S.C. 1640) the following new section:

``SEC. 129I. DUTIES OF LENDERS AND LOAN SERVICERS.

    ``(a) Standard of Care.--
            ``(1) Agency relationship.--In the case of any home loan 
        serviced by a loan servicer on behalf of a lender, the loan 
        servicer shall be deemed an agent of that lender, and shall be 
        subject to all requirements of agents otherwise applicable 
        under Federal or State law.
            ``(2) Fair dealing.--Each lender and loan servicer shall, 
        in addition to the duties imposed by otherwise applicable 
        provisions of Federal or State law, with respect to each home 
        mortgage loan, including any home mortgage loan in default or 
        in which the homeowner has filed for bankruptcy--
                    ``(A) act with reasonable skill, care, diligence, 
                and in accordance with the highest standards; and
                    ``(B) act in good faith and with fair dealing in 
                any transaction, practice, or course of business 
                associated with the home mortgage loan.
            ``(3) Training and competency.--Each lender and loan 
        servicer shall institute training, procedures, and standards to 
        ensure that borrowers are treated fairly and competently.
    ``(b) Rules for Assessment of Fee.--
            ``(1) In general.--No home mortgage loan contract may 
        require, nor may any lender or loan servicer assess or receive, 
        any fees or charges other than interest, late fees as 
        specifically authorized in this section, or fees assessed for 
        nonsufficient funds, and charges allowed pursuant to subsection 
        (h)(1)(B), until the home mortgage loan is the subject of a 
        foreclosure proceeding and the debt on such loan has been 
        accelerated.
            ``(2) Fee limitations.--Any permissible fee or charge 
        described under paragraph (1) shall be--
                    ``(A) reasonable;
                    ``(B) for services actually rendered; and
                    ``(C) specifically authorized by the terms of the 
                home mortgage loan contract and State law.
            ``(3) Assessment and disclosure.--
                    ``(A) In general.--Any permissible fee or charge 
                described under paragraph (1) shall be--
                            ``(i) assessed not later than 30 days after 
                        the date on which the fee was accrued; and
                            ``(ii) explained clearly and conspicuously 
                        in the next monthly accounting statement 
                        provided to the borrower designated in the home 
                        mortgage loan contract.
                    ``(B) Failure to comply.--Failure by a lender or 
                loan servicer to comply with the requirements set forth 
                under subparagraph (A) shall result in the waiver of 
                the fee.
            ``(4) Required statements.--Each month a lender or loan 
        servicer shall provide to each borrower designated in a home 
        mortgage loan contract entered into by such lender or loan 
        servicer a periodic statement that clearly and in plain English 
        explains--
                    ``(A) the application of the prior month's payment 
                by the borrower, including the allocation of the 
                payment to interest, principal, escrow, and fees;
                    ``(B) the status of the escrow account held on 
                behalf of the borrower, including the payments into and 
                from the escrow account; and
                    ``(C) the assessment of fees accruing in the 
                previous month, including the reason that such fee 
                accrued and the date such fee accrued.
    ``(c) Maximum Allowable Late Fees Charged After Loan Closing.--
            ``(1) In general.--No lender or loan servicer may impose a 
        charge or fee for late payment of any amount due on a home 
        mortgage loan--
                    ``(A) unless the home mortgage loan contract 
                specifically authorizes the charge or fee;
                    ``(B) in an amount in excess of 5 percent of the 
                amount of the payment past due;
                    ``(C) before the end of the 15-day period after the 
                date the payment is due, or in the case of a home 
                mortgage loan on which interest on each installment is 
                paid in advance, before the end of the 30-day period 
                after the date the payment is due; or
                    ``(D) more than once with respect to a single late 
                payment.
            ``(2) Rule of construction.--For purposes of this 
        subsection, payments on any amount due on a home mortgage loan 
        shall be applied first to current installments, then to 
        delinquent payments, and then to delinquency charges.
            ``(3) Coordination with subsequent late fees.--If a home 
        loan mortgage payment is otherwise a full payment for the 
        applicable period and is paid on its due date or within an 
        applicable grace period, and the only delinquency or 
        insufficiency of payment is attributable to a late fee or 
        delinquency charge assessed on an earlier payment, no late fee 
        or delinquency charge may be imposed on such payment.
    ``(d) Payoff Statements.--
            ``(1) Prohibition on fees.--
                    ``(A) In general.--No lender or loan servicer (or 
                any third party acting on behalf of such lender or loan 
                servicer) may charge a fee for transmitting to any 
                borrower the amount due to pay off the outstanding 
                balance on the home mortgage loan of such borrower.
                    ``(B) Exception.--After a lender or loan servicer 
                (or any third party acting on behalf of such lender or 
                loan servicer) has provided the information described 
                in subparagraph (A) without charge on 4 occasions 
                during a calendar year, the lender or loan servicer (or 
                any third party acting on behalf of such lender or loan 
                servicer) may thereafter charge a reasonable fee for 
                providing such information during the remainder of the 
                calendar year.
            ``(2) Timing.--The information described in subparagraph 
        (A) shall be provided to the borrower within a reasonable 
        period of time but in any event not more than 5 business days 
        after the receipt of the request by the lender or loan 
        servicer.
    ``(e) Civil Liability.--
            ``(1) In general.--Any lender or loan servicer who fails to 
        comply with any requirement of this section with respect to a 
        borrower designated in a home mortgage loan contract, is liable 
        to such borrower in an amount equal to the sum of--
                    ``(A) any actual damages sustained by such borrower 
                as a result of the failure;
                    ``(B) an amount not less than $5,000; or
                    ``(C) in the case of any successful action to 
                enforce the foregoing liability the costs of the 
                action, together with a reasonable attorney's fee as 
                determined by the court.
            ``(2) Jurisdiction.--Any action by a borrower for a failure 
        to comply with the requirements of this section may be brought 
        in any United States district court, or in any other court of 
        competent jurisdiction, not later than 3 years from the date of 
        the occurrence of such violation. This subsection does not bar 
        a person from asserting a violation of this section in an 
        action by a lender or loan servicer to collect the debt owed on 
        a home mortgage loan, or foreclose upon the home securing a 
        home mortgage loan, or to stop a foreclosure upon that home, 
        which was brought more than 3 years after the date of the 
        occurrence of the violation as a matter of defense by 
        recoupment or set-off in such action. An action under this 
        section does not create an independent basis for removal of an 
        action to a United States district court.
            ``(3) State attorney general enforcement.--An action to 
        enforce a violation of this section may also be brought by the 
        appropriate State attorney general in any appropriate United 
        States district court, or any other court of competent 
        jurisdiction, not later than 3 years after the date on which 
        the violation occurs. An action under this section does not 
        create an independent basis for removal of an action to a 
        United States district court.
    ``(f) Definitions.--In this section, the following definitions 
shall apply:
            ``(1) Lender.--The term `lender' has the same meaning as in 
        section 3500.2 of title 24, Code of Federal Regulations, as in 
        effect on the date of enactment of this section.
            ``(2) Loan servicer.--The term `loan servicer' has the same 
        meaning as the term `servicer' in section 6(i)(2) of the Real 
        Estate Settlement Procedures Act of 1974 (12 U.S.C. 
        2605(i)(2)).''.

SEC. 4. NOTICE OF TRANSFER OF LOAN SERVICING.

    Paragraph (3) of section 6(b) of the Real Estate Settlement 
Procedures Act of 1974 (12 U.S.C. 2605(b)(3)) is amended by adding at 
the end the following new subparagraph:
                    ``(H) A statement explaining--
                            ``(i) whether the account of the borrower 
                        is current, or if the account is not current, 
                        an explanation of the reason and date the 
                        account went into default;
                            ``(ii) the current balance due on the loan, 
                        including the principal due, an explanation of 
                        the escrow balance, and whether there are any 
                        escrow deficiencies or shortages; and
                            ``(iii) a full payment history of the 
                        borrower which shows in a clear and easily 
                        understandable manner, all of the activity on 
                        the home mortgage loan since the origination of 
                        the loan or the prior transfer of servicing, 
                        including the escrow account, and the 
                        application of payments.''.

SEC. 5. SERVICER COMPENSATION.

    Not later than the expiration of the 6-month period beginning on 
the date of the enactment of this Act, the Director of the Bureau of 
Consumer Financial Protection of the Federal Reserve System and the 
Federal banking regulatory agencies shall issue regulations to ensure 
that the means and manner of compensation of servicers of federally 
related mortgage loans is consistent with the purposes of this Act and 
the amendments made by this Act, and to the extent possible, does not 
provide incentives for foreclosure of such mortgages or disincentives 
to engaging in reasonable loss mitigation activities for such 
mortgages.

SEC. 6. EFFECTIVE DATE.

    This Act and the amendments made by this Act shall take effect on 
the later of the date of the enactment of this Act or the designated 
transfer date established under section 1062 of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act (12 U.S.C. 5582).
                                 <all>