[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 101 Introduced in House (IH)]

114th CONGRESS
  1st Session
                                H. R. 101

      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 HOUSE OF REPRESENTATIVES

                            January 6, 2015

 Mr. Conyers (for himself, Mr. Cohen, Ms. Jackson Lee, Mr. Johnson of 
   Georgia, Mr. McDermott, and Mr. Scott of Virginia) introduced the 
  following bill; which was 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 ``Home Foreclosure Reduction Act of 
2015''.

SEC. 2. DEFINITION.

    Section 101 of title 11, United States Code, is amended by 
inserting after paragraph (43) the following (and make such technical 
and conforming changes as may be appropriate):
            ``(43A) The term `qualified loan modification' means a loan 
        modification agreement made in accordance with the guidelines 
        of the Obama Administration's Homeowner Affordability and 
        Stability Plan as implemented March 4, 2009, that--
                    ``(A) reduces the debtor's payment (including 
                principal and interest, and payments for real estate 
                taxes, hazard insurance, mortgage insurance premium, 
                homeowners' association dues, ground rent, and special 
                assessments) on a loan secured by a senior security 
                interest in the principal residence of the debtor, to a 
                percentage of the debtor's income in accordance with 
                such guidelines, without any period of negative 
                amortization or under which the aggregate amount of the 
                regular periodic payments would not fully amortize the 
                outstanding principal amount of such loan;
                    ``(B) requires no fees or charges to be paid by the 
                debtor in order to obtain such modification; and
                    ``(C) permits the debtor to continue to make 
                payments under the modification agreement 
                notwithstanding the filing of a case under this title, 
                as if such case had not been filed.''.

SEC. 3. 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 value of such residence as of the date of the order for 
        relief under chapter 13 is less than the applicable maximum 
        amount of noncontingent, liquidated, secured debts specified in 
        this subsection; or
            ``(2) debts secured or formerly secured by what was the 
        debtor's principal residence that was sold in foreclosure or 
        that the debtor surrendered to the creditor if the value of 
        such real property as of the date of the order for relief under 
        chapter 13 was less than the applicable maximum amount of 
        noncontingent, liquidated, secured debts specified in this 
        subsection.'', and
            (2) by adding at the end of subsection (h) the following:
            ``(5) Notwithstanding the 180-day period specified in 
        paragraph (1), with respect to a debtor in a case under chapter 
        13 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, the requirements of paragraph (1) 
        shall be considered to be satisfied if the debtor satisfies 
        such requirements not later than the expiration of the 30-day 
        period beginning on the date of the filing of the petition.''.

SEC. 4. PROHIBITING CLAIMS ARISING FROM VIOLATIONS OF THE TRUTH IN 
              LENDING ACT.

    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 for a loan secured by a security interest 
        in the debtor's principal residence is subject to a remedy for 
        rescission under the Truth in Lending Act notwithstanding the 
        prior entry of a foreclosure judgment, except that nothing in 
        this paragraph shall be construed to modify, impair, or 
        supersede any other right of the debtor.''.

SEC. 5. AUTHORITY TO MODIFY CERTAIN MORTGAGES.

    Section 1322 of title 11, United States Code, is amended--
            (1) in subsection (b)--
                    (A) by redesignating paragraph (11) as paragraph 
                (12),
                    (B) in paragraph (10) by striking ``and'' at the 
                end, and
                    (C) by inserting after paragraph (10) the 
                following:
            ``(11) notwithstanding paragraph (2), with respect to a 
        claim for a loan originated before the effective date of this 
        paragraph and secured by a security interest in the debtor's 
        principal residence that is the subject of a notice that a 
        foreclosure may be commenced with respect to such loan, modify 
        the rights of the holder of such claim (and the rights of the 
        holder of any claim secured by a subordinate security interest 
        in such residence)--
                    ``(A) 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 loan 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 a fixed annual 
                        rate equal to the currently applicable average 
                        prime offer rate as of the date of the order 
                        for relief under this chapter, corresponding to 
                        the repayment term determined under the 
                        preceding paragraph, as published by the 
                        Federal Financial Institutions Examination 
                        Council in its table entitled `Average Prime 
                        Offer Rates--Fixed', plus a reasonable premium 
                        for risk; and
                    ``(D) by providing for payments of such modified 
                loan directly to the holder of the claim or, at the 
                discretion of the court, through the trustee during the 
                term of the plan; and'', and
            (2) by adding at the end the following:
    ``(g) A claim may be reduced under subsection (b)(11)(A) only on 
the condition that if the debtor sells the principal residence securing 
such claim, before completing all payments under the plan (or, if 
applicable, before receiving a discharge under section 1328(b)) and 
receives net proceeds from the sale of such residence, then the debtor 
agrees to pay to such holder not later than 15 days after receiving 
such proceeds--
            ``(1) if such residence is sold in the 1st year occurring 
        after the effective date of the plan, 90 percent of the amount 
        of the difference between the sales price and the amount of 
        such claim as originally determined under subsection (b)(11) 
        (plus costs of sale and improvements), but not to exceed the 
        unpaid amount of the allowed secured claim determined as if 
        such claim had not been reduced under such subsection;
            ``(2) if such residence is sold in the 2d year occurring 
        after the effective date of the plan, 70 percent of the amount 
        of the difference between the sales price and the amount of 
        such claim as originally determined under subsection (b)(11) 
        (plus costs of sale and improvements), but not to exceed the 
        unpaid amount of the allowed secured claim determined as if 
        such claim had not been reduced under such subsection;
            ``(3) if such residence is sold in the 3d year occurring 
        after the effective date of the plan, 50 percent of the amount 
        of the difference between the sales price and the amount of 
        such claim as originally determined under subsection (b)(11) 
        (plus costs of sale and improvements), but not to exceed the 
        unpaid amount of the allowed secured claim determined as if 
        such claim had not been reduced under such subsection;
            ``(4) if such residence is sold in the 4th year occurring 
        after the effective date of the plan, 30 percent of the amount 
        of the difference between the sales price and the amount of 
        such claim as originally determined under subsection (b)(11) 
        (plus costs of sale and improvements), but not to exceed the 
        unpaid amount of the allowed secured claim determined as if 
        such claim had not been reduced under such subsection; and
            ``(5) if such residence is sold in the 5th year occurring 
        after the effective date of the plan, 10 percent of the amount 
        of the difference between the sales price and the amount of 
        such claim as originally determined under subsection (b)(11) 
        (plus costs of sale and improvements), but not to exceed the 
        unpaid amount of the allowed secured claim determined as if 
        such claim had not been reduced under such subsection.
    ``(h) With respect to a claim of the kind described in subsection 
(b)(11), the plan may not contain a modification under the authority of 
subsection (b)(11)--
            ``(1) in a case commenced under this chapter after the 
        expiration of the 30-day period beginning on the effective date 
        of this subsection, unless--
                    ``(A) the debtor certifies that the debtor--
                            ``(i) not less than 30 days before the 
                        commencement of the case, contacted the holder 
                        of such claim (or the entity collecting 
                        payments on behalf of such holder) regarding 
                        modification of the loan that is the subject of 
                        such claim;
                            ``(ii) provided the holder of the claim (or 
                        the entity collecting payments on behalf of 
                        such holder) a written statement of the 
                        debtor's current income, expenses, and debt 
                        substantially conforming with the schedules 
                        required under section 521(a) or such other 
                        form as is promulgated by the Judicial 
                        Conference of the United States for such 
                        purpose; and
                            ``(iii) considered any qualified loan 
                        modification offered to the debtor by the 
                        holder of the claim (or the entity collecting 
                        payments on behalf of such holder); or
                    ``(B) a foreclosure sale is scheduled to occur on a 
                date in the 30-day period beginning on the date of case 
                is commenced; and
            ``(2) in any other case pending under this chapter, unless 
        the debtor certifies that the debtor attempted to contact the 
        holder of such claim (or the entity collecting payments on 
        behalf of such holder) regarding modification of the loan that 
        is the subject of such claim, before--
                    ``(A) filing a plan under section 1321 that 
                contains a modification under the authority of 
                subsection (b)(11); or
                    ``(B) modifying a plan under section 1323 or 1329 
                to contain a modification under the authority of 
                subsection (b)(11).
    ``(i) In determining the holder's allowed secured claim under 
section 506(a)(1) for purposes of subsection (b)(11)(A), the value of 
the debtor's principal residence shall be the fair market value of such 
residence on the date such value is determined and, if the issue of 
value is contested, the court shall determine such value in accordance 
with the appraisal rules used by the Federal Housing Administration.''.

SEC. 6. COMBATING EXCESSIVE FEES.

    Section 1322(c) of title 11, 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 and serves on the trustee, the debtor, 
                and the debtor's attorney (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. 7. CONFIRMATION OF PLAN.

    (a) Section 1325(a) of title 11, United States Code, is amended--
            (1) in the matter preceding paragraph (1) strike 
        ``subsection (b)'' and insert ``subsections (b) and (d)'',
            (2) in paragraph (5)--
                    (A) by inserting ``except as otherwise provided in 
                section 1322(b)(11),'' after ``(5)'', and
                    (B) in subparagraph (B)(iii)(I) by inserting 
                ``(including payments of a claim modified under section 
                1322(b)(11))'' after ``payments'' the first place it 
                appears,
            (3) in paragraph (8) by striking ``and'' at the end,
            (4) in paragraph (9) by striking the period at the end and 
        inserting a semicolon, and
            (5) by inserting after paragraph (9) the following:
            ``(10) notwithstanding subclause (I) of paragraph 
        (5)(B)(i), whenever the plan modifies a claim in accordance 
        with section 1322(b)(11), the holder of a claim whose rights 
        are modified pursuant to section 1322(b)(11) shall retain the 
        lien until the later of--
                    ``(A) the payment of such holder's allowed secured 
                claim; or
                    ``(B) completion of all payments under the plan 
                (or, if applicable, receipt of a discharge under 
                section 1328(b)); and
            ``(11) whenever the plan modifies a claim in accordance 
        with section 1322(b)(11), the court finds that such 
        modification is in good faith (Lack of good faith exists if the 
        debtor has no need for relief under this paragraph because the 
        debtor can pay all of his or her debts and any future payment 
        increases on such debts without difficulty for the foreseeable 
        future, including the positive amortization of mortgage debt. 
        In determining whether a reduction of the principal amount of 
        the loan resulting from a modification made under the authority 
        of section 1322(b)(11) is made in good faith, the court shall 
        consider whether the holder of such claim (or the entity 
        collecting payments on behalf of such holder) has offered to 
        the debtor a qualified loan modification that would enable the 
        debtor to pay such debts and such loan without reducing such 
        principal amount.) and does not find that the debtor has been 
        convicted of obtaining by actual fraud the extension, renewal, 
        or refinancing of credit that gives rise to a modified 
        claim.''.
    (b) Section 1325 of title 11, United States Code, is amended by 
adding at the end the following (and make such technical and conforming 
changes as may be appropriate):
    ``(d) Notwithstanding section 1322(b)(11)(C)(ii), the court, on 
request of the debtor or the holder of a claim secured by a senior 
security interest in the debtor's principal residence, may confirm a 
plan proposing a reduction in the interest rate on the loan secured by 
such security interest and that does not reduce the principal, provided 
the total monthly mortgage payment is reduced to a percentage of the 
debtor's income in accordance with the guidelines of the Obama 
Administration's Homeowner Affordability and Stability Plan as 
implemented March 4, 2009, if, taking into account the debtor's 
financial situation, after allowance of expenses that would be 
permitted for a debtor under this chapter subject to paragraph (3) of 
subsection (b), regardless of whether the debtor is otherwise subject 
to such paragraph, and taking into account additional debts and fees 
that are to be paid in this chapter and thereafter, the debtor would be 
able to prevent foreclosure and pay a fully amortizing 30-year loan at 
such reduced interest rate without such reduction in principal.''.

SEC. 8. DISCHARGE.

    Section 1328(a) of title 11, United States Code, is amended--
            (1) by inserting ``(other than payments to holders of 
        claims whose rights are modified under section 1322(b)(11))'' 
        after ``paid'', and
            (2) 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)''.

SEC. 9. STANDING TRUSTEE FEES.

    (a) Amendment to Title 28.--Section 586(e)(1)(B)(i) of title 28, 
United States Code, is amended--
            (1) by inserting ``(I) except as provided in subparagraph 
        (II)'' after ``(i)'',
            (2) by striking ``or'' at the end and inserting ``and'', 
        and
            (3) by adding at the end the following:
                            ``(II) 4 percent with respect to payments 
                        received under section 1322(b)(11) of title 11 
                        by the individual as a result of the operation 
                        of section 1322(b)(11)(D) of title 11, unless 
                        the bankruptcy court waives all fees with 
                        respect to such payments based on a 
                        determination that such individual has income 
                        less than 150 percent of the income official 
                        poverty line (as defined by the Office of 
                        Management and Budget, and revised annually in 
                        accordance with section 673(2) of the Omnibus 
                        Budget Reconciliation Act of 1981) applicable 
                        to a family of the size involved and payment of 
                        such fees would render the debtor's plan 
                        infeasible.''.
    (b) Conforming Provision.--The amendments made by this section 
shall apply to any trustee to whom the provisions of section 302(d)(3) 
of the Bankruptcy Judges, United States Trustees, and Family Farmer 
Bankruptcy Act of 1986 (Public Law 99-554; 100 Stat. 3121) apply.

SEC. 10. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

    (a) Effective Date.--Except as provided in subsection (b), this 
subtitle and the amendments made by this subtitle shall take effect on 
the date of the enactment of this Act.
    (b) Application of Amendments.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this subtitle shall apply with respect to 
        cases commenced under title 11 of the United States Code 
        before, on, or after the date of the enactment of this Act.
            (2) Limitation.--Paragraph (1) shall not apply with respect 
        to cases closed under title 11 of the United States Code as of 
        the date of the enactment of this Act that are neither pending 
        on appeal in, nor appealable to, any court of the United 
        States.

SEC. 11. GAO STUDY.

    The Comptroller General shall carry out a study, and submit to the 
Committee on the Judiciary of the House of Representatives and the 
Committee on the Judiciary of the Senate, not later than 2 years after 
the date of the enactment of this Act a report containing--
            (1) the results of such study of--
                    (A) the number of debtors who filed, during the 1-
                year period beginning on the date of the enactment of 
                this Act, cases under chapter 13 of title 11 of the 
                United States Code for the purpose of restructuring 
                their principal residence mortgages,
                    (B) the number of mortgages restructured under the 
                amendments made by this subtitle that subsequently 
                resulted in default and foreclosure,
                    (C) a comparison between the effectiveness of 
                mortgages restructured under programs outside of 
                bankruptcy, such as Hope Now and Help for Homeowners, 
                and mortgages restructured under the amendments made by 
                this subtitle,
                    (D) the number of cases presented to the bankruptcy 
                courts where mortgages were restructured under the 
                amendments made by this subtitle that were appealed,
                    (E) the number of cases presented to the bankruptcy 
                courts where mortgages were restructured under the 
                amendments made by the subtitle that were overturned on 
                appeal, and
                    (F) the number of bankruptcy judges disciplined as 
                a result of actions taken to restructure mortgages 
                under the amendments made by this subtitle, and
            (2) a recommendation as to whether such amendments should 
        be amended to include a sunset clause.

SEC. 12. REPORT TO CONGRESS.

    Not later than 18 months after the date of the enactment of this 
Act, the Comptroller General, in consultation with the Federal Housing 
Administration, shall submit to the Congress, a report containing--
            (1) a comprehensive review of the effects of the amendments 
        made by this subtitle on bankruptcy court,
            (2) a survey of whether the program should limit the types 
        of homeowners eligible for the program, and
            (3) a recommendation on whether such amendments should 
        remain in effect.
                                 <all>