[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1706 Introduced in House (IH)]

113th CONGRESS
  1st Session
                                H. R. 1706

   To establish an Independent Monitor to maintain oversight of the 
    settlement by mortgage servicing companies that were subject to 
    enforcement actions for unsafe and unsound practices related to 
residential mortgage loan servicing and foreclosure processing, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 24, 2013

Mr. Cummings (for himself, Ms. Waters, Mr. George Miller of California, 
Mr. Conyers, Mr. Waxman, Mr. Tierney, Ms. Lofgren, and Ms. Schakowsky) 
 introduced the following bill; which was referred to the Committee on 
                           Financial Services

_______________________________________________________________________

                                 A BILL


 
   To establish an Independent Monitor to maintain oversight of the 
    settlement by mortgage servicing companies that were subject to 
    enforcement actions for unsafe and unsound practices related to 
residential mortgage loan servicing and foreclosure processing, 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 ``Mortgage Settlement Monitoring Act 
of 2013''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) In April 2011, the Federal Reserve System, the Office 
        of the Comptroller of the Currency, and the then-Office of 
        Thrift Supervision issued a joint report titled ``Interagency 
        Review of Foreclosure Policies and Practices'' summarizing the 
        results of ``horizontal reviews'' of the Nation's 14 largest 
        mortgage servicers finding ``critical weaknesses in servicers' 
        foreclosures governance practices, foreclosure document 
        preparation processes, and oversight and monitoring of third-
        party vendors, including foreclosure attorneys,'' resulting in 
        ``unsafe and unsound practices and violations of applicable 
        Federal and State law requirements''.
            (2) As part of federal enforcement actions addressing these 
        unsafe and unsound practices related to residential mortgage 
        loan servicing and foreclosure processing, fourteen mortgage 
        servicing companies entered into consent orders with the Board 
        of Governors of the Federal Reserve System and the Office of 
        the Comptroller of the Currency beginning on April 13, 2011.
            (3) The consent orders required these mortgage servicers to 
        undertake an ``Independent Foreclosure Review'' in order to 
        ascertain individual harms and provide appropriate monetary 
        relief to homeowners as a result of these business practice 
        failures. Mortgage servicers contracted with third-party 
        consultants approved by the federal agencies to conduct these 
        reviews.
            (4) During the tenure of the Independent Foreclosure Review 
        process, questions persisted concerning the nature and adequacy 
        of the reviews and expected remediation as well as the 
        independence of the third-party reviewers.
            (5) On February 28, 2013, the Board of Governors of the 
        Federal Reserve System and the Office of the Comptroller of the 
        Currency finalized amendments to the April 2011 consent orders 
        with 11 of the 14 mortgage servicers. Under the terms of these 
        orders, mortgage servicers are to provide cash payments and 
        other assistance to borrowers--including more than 
        $3,000,000,000 in direct cash payments to borrowers who had 
        homes in foreclosure in 2009 or 2010--and the Independent 
        Foreclosure Review process will cease for the mortgage 
        servicers who agreed to enter into the amended consent orders.
            (6) On April 4, 2013, the Government Accountability Office 
        (GAO) issued a report titled ``Foreclosure Review: Lessons 
        Learned Could Enhance Continuing Reviews and Activities Under 
        Amended Consent Orders'' which examined the Independent 
        Foreclosure Review process. It found that the ``[c]omplexity of 
        the reviews, overly broad guidance, and limited monitoring for 
        consistency impeded the ability of the Office of the 
        Comptroller of the Currency (OCC) and the Board of Governors of 
        the Federal Reserve System (Federal Reserve) to achieve the 
        goals of the foreclosure review''. The report also stated that 
        ``limited communication with borrowers and the public adversely 
        impacted transparency and public confidence,'' and the GAO 
        recommended that the Board of Governors of the Federal Reserve 
        System and the Office of the Comptroller of the Currency 
        ``identify and apply lessons from the foreclosure review 
        process, such as enhancing planning, and monitoring activities 
        to achieve goals, as they develop and implement the activities 
        under the amended consent orders''.
            (7) In light of the significant harm caused by mortgage 
        servicers' unsafe and unsound business practices, and the lack 
        of transparency surrounding the Independent Foreclosure Review 
        process and the amended consent orders that replace this 
        process, it is essential that thorough oversight be conducted 
        over these new orders to ensure that all terms are fully 
        enforced. Creation of an Office of the Independent Monitor, 
        which will provide reports directly to Congress, will aid in 
        meeting this objective.

SEC. 3. SETTLEMENT DEFINED.

    For purposes of this Act, the term ``settlement'' means--
            (1) the amended consent orders finalized on February 28, 
        2013, between the Board of Governors of the Federal Reserve 
        System and the Office of the Comptroller of the Currency and 11 
        mortgage servicing companies that were subject to enforcement 
        actions for unsafe and unsound practices related to residential 
        mortgage loan servicing and foreclosure processing; and
            (2) any future agreement between the Board of Governors of 
        the Federal Reserve System and the Office of the Comptroller of 
        the Currency and a mortgage servicing company, the terms of 
        which are similar to the agreement described in paragraph (1).

SEC. 4. INDEPENDENT MONITOR.

    (a) Establishment.--
            (1) In general.--There is hereby established the Office of 
        the Independent Monitor, to be headed by the Independent 
        Monitor. The purpose of the Independent Monitor shall be to 
        determine the compliance of all parties to the settlement with 
        the terms of the settlement and to provide expanded 
        transparency over the implementation of the amended consent 
        orders to rebuild the confidence of the general public.
            (2) Appointment.--
                    (A) In general.--The President shall appoint, not 
                later than the end of the 45-day period beginning on 
                the date of the enactment of this Act, the Independent 
                Monitor from among individuals with extensive 
                experience in consumer protection laws and practices, 
                particularly in such areas as mortgage lending.
                    (B) Vacancy.--If at any point the position of 
                Independent Monitor becomes vacant, the President shall 
                appoint, not later than the end of the 60-day period 
                beginning on the date such vacancy occurs, a new 
                Independent Monitor from among individuals described 
                under subparagraph (A).
            (3) Staff.--Upon request of the Independent Monitor, any 
        executive agency, including the Board of Governors of the 
        Federal Reserve System or the Comptroller of the Currency shall 
        detail, on a reimbursable basis, any employee to the Office of 
        the Independent Monitor to assist it in carrying out its duties 
        under this Act, but under no circumstances may the Office of 
        the Independent Monitor have more than 16 employees, not 
        including the Independent Monitor.
            (4) Funding.--The costs of the Office of the Independent 
        Monitor shall be paid out of the funds paid by mortgage 
        servicing companies under the settlement, other than any funds 
        designated for direct cash payments to borrowers who held loans 
        during 2009 or 2010.
    (b) Duties.--The Independent Monitor shall--
            (1) issue a quarterly report covering all actions taken to 
        date, with the first such report detailing actions taken from 
        the date of the execution of the settlement, to the Board of 
        Governors of the Federal Reserve System, the Comptroller of the 
        Currency, and the Congress containing--
                    (A) a detailed description of--
                            (i) the eligibility criteria used to 
                        determine who will receive direct and indirect 
                        aid provided under the settlement, including 
                        information detailing instances in which the 
                        criteria are not transparent, certain, 
                        objective, or equitably applied;
                            (ii) the methodologies used to calculate 
                        and allocate direct and indirect aid provided 
                        under the settlement, including information 
                        detailing instances in which the methodologies 
                        are not transparent, certain, objective, or 
                        equitably applied;
                            (iii) the proof requirements applied to 
                        recipients of direct and indirect aid provided 
                        under the settlement, including information 
                        detailing instances in which the requirements 
                        are not transparent, certain, objective, or 
                        equitably applied; and
                            (iv) the extent to which those receiving 
                        direct and indirect aid under the settlement 
                        receive procedural due process, including 
                        information detailing instances in which such 
                        due process has been denied;
                    (B) information on the total number of borrowers 
                who held loans in 2009 or 2010 who receive direct 
                compensation under the settlement, disaggregated by 
                each mortgage servicer subject to the settlement, 
                including--
                            (i) demographic and other data related to 
                        such borrowers, including race, gender, 
                        geography, and the property value of the 
                        property securing such loans;
                            (ii) the level of direct compensation 
                        provided to similarly situated borrowers, 
                        including a review of the methods used to 
                        determine the level of direct compensation 
                        provided and the adequacy of such direct 
                        compensation; and
                            (iii) total direct compensation provided to 
                        date;
                    (C) information on the total number of borrowers 
                with mortgage loans who receive loan modifications or 
                other types of assistance, such as the forgiveness of a 
                deficiency judgment, short sale, deed in lieu, or 
                forbearance agreement, under the settlement, 
                disaggregated by each mortgage servicer subject to the 
                settlement, including--
                            (i) demographic and other data related to 
                        such borrowers, including race, gender, 
                        geography, and the property value of the 
                        property securing such loans; and
                            (ii) the number of each type of loan 
                        modification or other assistance provided to 
                        borrowers, including the amount of principal 
                        reduction provided under modifications that 
                        include a principal reduction element, the 
                        level of interest reductions provided to 
                        borrowers who receive an interest reduction, 
                        and the total amount of deficiencies forgiven 
                        for each of the first, second, or any 
                        subsequent loans, and the number of borrowers 
                        receiving each type of relief who were already 
                        in a trial modification when offered assistance 
                        under the settlement and the number who were 
                        not in a trial modification, and whether there 
                        has been disparate treatment of those 
                        borrowers;
                    (D) the credit that parties to the settlement have 
                been given through the provision of loan modifications 
                and other types of assistance to borrowers, including 
                principal reduction modifications, disaggregated by 
                each mortgage servicer subject to the settlement, and a 
                determination by the Independent Monitor of whether 
                such credit reflects the real dollar value of the 
                modifications and has not been provided for 
                modifications that have little or no economic value and 
                that do not result in sustainable modifications;
                    (E) a list of any instances in which the 
                Independent Monitor has determined that a party to the 
                settlement has substantially failed to comply with the 
                terms of the settlement, including a description of the 
                nature of each instance of noncompliance;
                    (F) a list of any actions taken by the Board of 
                Governors of the Federal Reserve System or the 
                Comptroller of the Currency to compel compliance with 
                the terms of the settlement;
                    (G) a review of the efforts undertaken by parties 
                to the settlement to locate borrowers who held loans in 
                2009 or 2010, including the adequacy of outreach 
                methods used to contact such borrowers and the response 
                rate of such borrowers;
                    (H) information on the extent to which any 
                assistance provided to borrowers under the settlement 
                receives credit under both the settlement and also 
                another settlement;
                    (I) a detailed description of--
                            (i) the dispute resolution procedures 
                        established by the Board of Governors of the 
                        Federal Reserve System and the Comptroller of 
                        the Currency, if any, to enable borrowers to 
                        seek either a formal review of the direct or 
                        indirect relief provided to them under the 
                        terms of the settlement, or a formal review of 
                        a determination that they are not entitled to 
                        direct or indirect relief under the terms of 
                        the settlement, including a review of the 
                        adequacy of these procedures in responding to 
                        borrowers' concerns and complaints and in 
                        fairly and equitably resolving these requests 
                        for review; and
                            (ii) if such procedures have been 
                        established, the total number of borrowers who 
                        have requested a review under the dispute 
                        resolution procedures, the number of 
                        outstanding requests awaiting adjudication and 
                        the number of fully adjudicated claims, the 
                        average time required to adjudicate claims 
                        under the dispute resolution procedures, the 
                        number of cases in which the arbiter 
                        recommended changing the initial determination 
                        of relief offered to a borrower, and the number 
                        of cases in which the recommendations issued by 
                        the arbiter were affirmed and implemented by 
                        the Board of Governors of the Federal Reserve 
                        System and the Comptroller of the Currency;
                    (J) the number of in-scope borrowers whose 
                foreclosures are completed during the reporting period; 
                and
                    (K) any other information that the Independent 
                Monitor deems necessary to discharge the duties of the 
                Independent Monitor and to determine compliance with 
                the settlement;
            (2) make each report described under paragraph (1) 
        available to the public, including on a publicly accessible 
        website; and
            (3) hold, at a minimum, five public meetings in which 
        members of the public may give testimony regarding the 
        administration of the settlement, and where such meetings--
                    (A) being announced at least two weeks in advance; 
                and
                    (B) held in five different States.
    (c) Power To Require Production.--Not withstanding any other 
provision of law, the Independent Monitor may require the production 
from any party to the settlement of any documents, information, and 
data related to the settlement that the Independent Monitor determines 
necessary to carry out the duties of the Independent Monitor.
    (d) Confidentiality of Information.--In carrying out the 
requirements under this Act, including the report requirement under 
subsection (b)(1), the Independent Monitor shall ensure that all 
personally identifiable information is kept confidential.
    (e) Enforcement.--
            (1) In general.--If the Independent Monitor determines that 
        a party to the settlement substantially failed to comply with 
        the terms of the settlement or otherwise violates any provision 
        of this Act, the Independent Monitor shall refer a finding of 
        noncompliance to--
                    (A) the Board of Governors of the Federal Reserve 
                System and the Comptroller of the Currency, for 
                noncompliance involving conduct of mortgage servicers 
                subject to the settlement;
                    (B) the Inspector General of the Board of Governors 
                of the Federal Reserve System and the Bureau of 
                Consumer Financial Protection, for noncompliance 
                involving conduct of the Board of Governors of the 
                Federal Reserve System; or
                    (C) the Inspector General of the Department of the 
                Treasury, for noncompliance involving conduct of the 
                Office of the Comptroller of the Currency.
            (2) Handling of referral.--Upon receipt of a referral of 
        noncompliance made under paragraph (1)(A), the Board of 
        Governors of the Federal Reserve System and the Comptroller of 
        the Currency shall, jointly--
                    (A) within the 30-day period beginning on the date 
                of receipt of the referral, issue a report to the 
                Congress containing a plan of action to cure the 
                noncompliance; and
                    (B) within the 60-day period beginning on the date 
                of receipt of the referral, take such action to cure 
                the noncompliance.
            (3) Backup authority.--If the Board of Governors of the 
        Federal Reserve System and the Comptroller of the Currency fail 
        to take the action required under subparagraph (A) or (B) of 
        paragraph (2), the Independent Monitor may take any action 
        available to the Board of Governors of the Federal Reserve 
        System or the Comptroller of the Currency in order to cure the 
        noncompliance.
            (4) Referral of criminal violations.--If the Independent 
        Monitor determines that evidence exists to suggest that a party 
        to the settlement may have committed a violation of any Federal 
        or State criminal statute, the Independent Monitor shall refer 
        such determination to the appropriate law enforcement agency.

SEC. 5. SAVINGS CLAUSE.

    Nothing in this Act shall be construed as--
            (1) limiting the ability of any Federal or State entity to 
        examine or bring action pertaining to any aspect of the 
        settlement; or
            (2) limiting the ability of any borrower to take any action 
        arising under State or Federal law.

SEC. 6. SUNSET.

    (a) In General.--This Act shall cease to have any force or effect 
on and after the date that is the day after the end of the 90-day 
period beginning on the date that all parties fully satisfy the terms 
of the settlement.
    (b) Final Report.--Within the 90-day period described under 
paragraph (1), the Independent Monitor shall submit a final report to 
the Congress containing the information described under subsection 
(b)(1) and any other information the Independent Monitor feels is 
appropriate.
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