[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 3426 Introduced in Senate (IS)]

<DOC>






114th CONGRESS
  2d Session
                                S. 3426

   To provide nonprofit organizations and local governments with the 
  opportunity to match a bid with respect to the sale of certain non-
   performing loans by the Government-sponsored enterprises and the 
        Federal Housing Administration, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 28, 2016

  Mr. Booker (for himself and Mr. Menendez) introduced the following 
 bill; which was read twice and referred to the Committee on Banking, 
                       Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
   To provide nonprofit organizations and local governments with the 
  opportunity to match a bid with respect to the sale of certain non-
   performing loans by the Government-sponsored enterprises and the 
        Federal Housing Administration, 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 ``Homeowner Foreclosure Reduction Act 
of 2016''.

SEC. 2. LOANS OWNED BY FANNIE MAE.

    Section 302 of the Federal National Mortgage Association Charter 
Act (12 U.S.C. 1717) is amended by adding at the end the following:
    ``(d) Sale of Non-Performing Loans.--
            ``(1) In this subsection--
                    ``(A) the term `covered pool' means a pool of non-
                performing loans owned under this title--
                            ``(i) that contains not more than 300 
                        loans;
                            ``(ii) that is, to the extent practicable, 
                        geographically concentrated; and
                            ``(iii) for which the corporation, with 
                        respect to the sale of loans in the pool, 
                        encourages purchase of the loans by qualifying 
                        nonprofits and qualifying local governments;
                    ``(B) the term `non-covered pool' means a pool of 
                non-performing loans owned under this title that is not 
                a covered pool;
                    ``(C) the term `qualifying local government' means 
                a local government that the corporation has permitted 
                to bid, after an initial auction, on a covered pool or 
                a non-covered pool; and
                    ``(D) the term `qualifying nonprofit' means a 
                nonprofit organization that the corporation has 
                permitted to bid, after an initial auction, on a 
                covered pool or a non-covered pool.
            ``(2)(A) The corporation, with respect to an auction for 
        the sale of non-performing loans, shall ensure that not fewer 
        than 25 percent of the loans that are offered for sale in the 
        auction are loans in covered pools.
            ``(B) The corporation shall ensure that, after an entity 
        that is not a qualifying nonprofit or a qualifying local 
        government submits the highest bid on a non-covered pool, 
        qualifying nonprofits and qualifying local governments have the 
        opportunity to submit a bid to purchase not more than 5 percent 
        of the loans in the non-covered pool in accordance with the 
        procedures set forth in paragraph (3)(B).
            ``(3)(A) With respect to the sale of a covered pool when a 
        qualifying nonprofit or a qualifying local government is a 
        party bidding on the covered pool, the corporation shall--
                    ``(i) notify each bidder that a qualifying 
                nonprofit or a qualifying local government is a bidder 
                on the covered pool;
                    ``(ii) if, after receiving bids from each of the 
                bidders on the covered pool, the corporation determines 
                that an entity that is not a qualifying nonprofit or a 
                qualifying local government submitted the highest 
                overall bid--
                            ``(I) disclose to the qualifying nonprofit 
                        or qualifying local government that submitted 
                        the highest bid (among bids submitted by 
                        qualifying nonprofits and qualifying local 
                        governments) the amount of the highest overall 
                        bid that was submitted;
                            ``(II) provide the qualifying nonprofit or 
                        qualifying local government that submitted the 
                        highest bid with an opportunity to, not later 
                        than 2 days after receiving notice from the 
                        corporation, submit a bid in an amount greater 
                        than the highest overall bid; and
                            ``(III) if a qualifying nonprofit or 
                        qualifying local government, as applicable, 
                        described in subclause (II) chooses not to 
                        submit a bid as described in that subclause, 
                        provide each successive qualifying nonprofit or 
                        qualifying local government that submitted the 
                        next highest bid with an opportunity to, not 
                        later than 2 days after receiving notice from 
                        the corporation and a disclosure described in 
                        subclause (I), submit a bid in an amount 
                        greater than the highest overall bid; and
                    ``(iii) sell the covered pool to a qualifying 
                nonprofit or a qualifying local government if a 
                qualifying nonprofit or qualifying local government, as 
                applicable, under subclause (II) or (III) of clause 
                (ii), submits a bid in an amount greater than the 
                highest overall bid.
            ``(B) With respect to the sale of a non-covered pool--
                    ``(i) not later than 2 days after the date on which 
                an entity that is not a qualifying nonprofit or a 
                qualifying local government submits the highest overall 
                bid on the non-covered pool--
                            ``(I) the corporation shall disclose to 
                        qualifying nonprofits and qualifying local 
                        governments the amount of the highest overall 
                        bid submitted on the non-covered pool, 
                        including the amount of the bid for each 
                        individual loan in the non-covered pool; and
                            ``(II) a qualifying nonprofit or a 
                        qualifying local government may submit to the 
                        corporation a bid to purchase not more than 5 
                        percent of the loans in the non-covered pool;
                    ``(ii) except as provided in subparagraph (C), the 
                corporation shall sell a loan described in clause 
                (i)(II) to a qualifying nonprofit or qualifying local 
                government, as applicable, if, with respect to that 
                loan, the bid of the qualifying nonprofit or qualifying 
                local government is equal to or more than the bid of 
                the entity that submitted the highest overall bid for 
                the non-covered pool; and
                    ``(iii) the total number of loans sold under clause 
                (ii) may not exceed 10 percent of the number of loans 
                in the non-covered pool.
            ``(C)(i) The corporation shall determine which loans in a 
        non-covered pool shall be sold to a qualifying nonprofit or a 
        qualifying local government if the aggregate number of loans 
        sold under subparagraph (B)(ii) to qualifying nonprofits and 
        qualifying local governments would violate subparagraph 
        (B)(iii).
            ``(ii) If, under subparagraph (B)(i)(II), more than 1 
        qualifying nonprofit or qualifying local government submits a 
        bid for a loan that is equal to or higher than the bid 
        submitted by the entity that had submitted the highest overall 
        bid, the corporation shall sell the loan to the qualifying 
        nonprofit or qualifying local government that submitted the 
        highest bid.
            ``(4) Before submitting a bid with respect to a covered 
        pool or a non-covered pool, a nonprofit organization or local 
        government, in order to be considered a qualifying nonprofit or 
        qualifying local government, as applicable, shall submit to the 
        corporation an application containing such information as the 
        corporation determines appropriate.
            ``(5) Any entity that purchases a covered pool under this 
        subsection--
                    ``(A) may not foreclose on any of the occupied 
                properties that secure loans in the pool during the 12-
                month period following the purchase; and
                    ``(B) shall ensure that, not later than 4 years 
                after the settlement date, not less than 50 percent of 
                the loans in the pool result in--
                            ``(i) a modified loan that--
                                    ``(I) has a loan-to-value ratio 
                                after the modification of the loan that 
                                is not greater than 115 percent;
                                    ``(II) performs over a period of 
                                not less than 6 months;
                                    ``(III) does not include an up-
                                front fee or require prepayment of any 
                                amount of the mortgage debt; and
                                    ``(IV)(aa) is fixed rate for the 
                                entire period in which the loan being 
                                modified is in effect; or
                                    ``(bb) offers an initial period in 
                                which the interest rate is reduced and 
                                an increase in the interest rate is 
                                limited to not more than 1 percent per 
                                year after an initial 5-year period in 
                                which the interest rate is fixed, with 
                                a maximum interest rate not exceeding 
                                the prevailing market rate for loans;
                            ``(ii) a short sale of the property that 
                        secures the loan to an owner-occupant;
                            ``(iii) with respect to a qualifying 
                        nonprofit or a qualifying local government that 
                        purchases a covered pool under paragraph 
                        (3)(A)(iii), holding the property that secures 
                        the loan for rental for a period of not less 
                        than 3 years, where such rental is affordable 
                        to a household with an annual income at or 
                        below the area median income;
                            ``(iv) with the approval of the 
                        corporation, gifting the property that secures 
                        the loan to a land bank, a nonprofit 
                        organization, or a State or local government, 
                        with additional funds provided for demolition 
                        and maintenance; or
                            ``(v) with the approval of the corporation, 
                        sale of the loan or the property that secures 
                        the loan to a nonprofit organization.
            ``(6) A qualifying nonprofit or a qualifying local 
        government that purchases a covered pool under paragraph 
        (3)(A)(iii) shall ensure that not less than 60 percent of the 
        loans in the pool result in not less than one of the outcomes 
        described in clauses (i) through (v) of paragraph (5)(B).
            ``(7)(A) Any entity that purchases a covered pool under 
        this subsection that contains a loan for which the property 
        securing the loan is vacant shall ensure that the servicer of 
        the loan--
                    ``(i) does not release the lien on the property; 
                and
                    ``(ii) maintains the property in accordance with 
                generally acceptable maintenance standards.
            ``(B) If the servicer of a loan described in subparagraph 
        (A) does not comply with the requirements of that subparagraph, 
        the entity that purchased the covered pool shall sell or donate 
        the loan to another entity, including a government or nonprofit 
        entity.
            ``(8) Nothing in this subsection shall be construed to 
        prevent the corporation from ensuring that a qualifying 
        nonprofit or a qualifying local government has the opportunity 
        to be the last bidder on a covered pool or a non-covered pool 
        under procedures other than those described in this section.
            ``(9) In addition to the requirements under this 
        subsection--
                    ``(A) any entity that purchases a non-covered pool 
                shall meet all of the requirements of the corporation 
                in effect on the day before the date of enactment of 
                this subsection; and
                    ``(B) the corporation may impose any other 
                requirements with respect to the purchase of a covered 
                pool or a non-covered pool that the corporation 
                determines are appropriate.''.

SEC. 3. LOANS OWNED BY FREDDIE MAC.

    Section 305 of the Federal Home Loan Mortgage Corporation Act (12 
U.S.C. 1454) is amended by adding at the end the following:
    ``(d) Sale of Non-Performing Loans.--
            ``(1) In this subsection--
                    ``(A) the term `covered pool' means a pool of non-
                performing loans owned under this title--
                            ``(i) that contains not more than 300 
                        loans;
                            ``(ii) that is, to the extent practicable, 
                        geographically concentrated; and
                            ``(iii) for which the corporation, with 
                        respect to the sale of loans in the pool, 
                        encourages purchase of the loans by qualifying 
                        nonprofits and qualifying local governments;
                    ``(B) the term `non-covered pool' means a pool of 
                non-performing loans owned under this title that is not 
                a covered pool;
                    ``(C) the term `qualifying local government' means 
                a local government that the corporation has permitted 
                to bid, after an initial auction, on a covered pool or 
                a non-covered pool; and
                    ``(D) the term `qualifying nonprofit' means a 
                nonprofit organization that the corporation has 
                permitted to bid, after an initial auction, on a 
                covered pool or a non-covered pool.
            ``(2)(A) The corporation, with respect to an auction for 
        the sale of non-performing loans, shall ensure that not fewer 
        than 25 percent of the loans that are offered for sale in the 
        auction are loans in covered pools.
            ``(B) The corporation shall ensure that, after an entity 
        that is not a qualifying nonprofit or a qualifying local 
        government submits the highest bid on a non-covered pool, 
        qualifying nonprofits and qualifying local governments have the 
        opportunity to submit a bid to purchase not more than 5 percent 
        of the loans in the non-covered pool in accordance with the 
        procedures set forth in paragraph (3)(B).
            ``(3)(A) With respect to the sale of a covered pool when a 
        qualifying nonprofit or a qualifying local government is a 
        party bidding on the covered pool, the corporation shall--
                    ``(i) notify each bidder that a qualifying 
                nonprofit or a qualifying local government is a bidder 
                on the covered pool;
                    ``(ii) if, after receiving bids from each of the 
                bidders on the covered pool, the corporation determines 
                that an entity that is not a qualifying nonprofit or a 
                qualifying local government submitted the highest 
                overall bid--
                            ``(I) disclose to the qualifying nonprofit 
                        or qualifying local government that submitted 
                        the highest bid (among bids submitted by 
                        qualifying nonprofits and qualifying local 
                        governments) the amount of the highest overall 
                        bid that was submitted;
                            ``(II) provide the qualifying nonprofit or 
                        qualifying local government that submitted the 
                        highest bid with an opportunity to, not later 
                        than 2 days after receiving notice from the 
                        corporation, submit a bid in an amount greater 
                        than the highest overall bid; and
                            ``(III) if a qualifying nonprofit or 
                        qualifying local government, as applicable, 
                        described in subclause (II) chooses not to 
                        submit a bid as described in that subclause, 
                        provide each successive qualifying nonprofit or 
                        qualifying local government that submitted the 
                        next highest bid with an opportunity to, not 
                        later than 2 days after receiving notice from 
                        the corporation and a disclosure described in 
                        subclause (I), submit a bid in an amount 
                        greater than the highest overall bid; and
                    ``(iii) sell the covered pool to a qualifying 
                nonprofit or a qualifying local government if a 
                qualifying nonprofit or qualifying local government, as 
                applicable, under subclause (II) or (III) of clause 
                (ii), submits a bid in an amount greater than the 
                highest overall bid.
            ``(B) With respect to the sale of a non-covered pool--
                    ``(i) not later than 2 days after the date on which 
                an entity that is not a qualifying nonprofit or a 
                qualifying local government submits the highest overall 
                bid on the non-covered pool--
                            ``(I) the corporation shall disclose to 
                        qualifying nonprofits and qualifying local 
                        governments the amount of the highest overall 
                        bid submitted on the non-covered pool, 
                        including the amount of the bid for each 
                        individual loan in the non-covered pool; and
                            ``(II) a qualifying nonprofit or a 
                        qualifying local government may submit to the 
                        corporation a bid to purchase not more than 5 
                        percent of the loans in the non-covered pool;
                    ``(ii) except as provided in subparagraph (C), the 
                corporation shall sell a loan described in clause 
                (i)(II) to a qualifying nonprofit or qualifying local 
                government, as applicable, if, with respect to that 
                loan, the bid of the qualifying nonprofit or qualifying 
                local government is equal to or more than the bid of 
                the entity that submitted the highest overall bid for 
                the non-covered pool; and
                    ``(iii) the total number of loans sold under clause 
                (ii) may not exceed 10 percent of the number of loans 
                in the non-covered pool.
            ``(C)(i) The corporation shall determine which loans in a 
        non-covered pool shall be sold to a qualifying nonprofit or a 
        qualifying local government if the aggregate number of loans 
        sold under subparagraph (B)(ii) to qualifying nonprofits and 
        qualifying local governments would violate subparagraph 
        (B)(iii).
            ``(ii) If, under subparagraph (B)(i)(II), more than 1 
        qualifying nonprofit or qualifying local government submits a 
        bid for a loan that is equal to or higher than the bid 
        submitted by the entity that had submitted the highest overall 
        bid, the corporation shall sell the loan to the qualifying 
        nonprofit or qualifying local government that submitted the 
        highest bid.
            ``(4) Before submitting a bid with respect to a covered 
        pool or a non-covered pool, a nonprofit organization or local 
        government, in order to be considered a qualifying nonprofit or 
        qualifying local government, as applicable, shall submit to the 
        corporation an application containing such information as the 
        corporation determines appropriate.
            ``(5) Any entity that purchases a covered pool under this 
        subsection--
                    ``(A) may not foreclose on any of the occupied 
                properties that secure loans in the pool during the 12-
                month period following the purchase; and
                    ``(B) shall ensure that, not later than 4 years 
                after the settlement date, not less than 50 percent of 
                the loans in the pool result in--
                            ``(i) a modified loan that--
                                    ``(I) has a loan-to-value ratio 
                                after the modification of the loan that 
                                is not greater than 115 percent;
                                    ``(II) performs over a period of 
                                not less than 6 months;
                                    ``(III) does not include an up-
                                front fee or require prepayment of any 
                                amount of the mortgage debt; and
                                    ``(IV)(aa) is fixed rate for the 
                                entire period in which the loan being 
                                modified is in effect; or
                                    ``(bb) offers an initial period in 
                                which the interest rate is reduced and 
                                an increase in the interest rate is 
                                limited to not more than 1 percent per 
                                year after an initial 5-year period in 
                                which the interest rate is fixed, with 
                                a maximum interest rate not exceeding 
                                the prevailing market rate for loans;
                            ``(ii) a short sale of the property that 
                        secures the loan to an owner-occupant;
                            ``(iii) with respect to a qualifying 
                        nonprofit or a qualifying local government that 
                        purchases a covered pool under paragraph 
                        (3)(A)(iii), holding the property that secures 
                        the loan for rental for a period of not less 
                        than 3 years, where such rental is affordable 
                        to a household with an annual income at or 
                        below the area median income;
                            ``(iv) with the approval of the 
                        corporation, gifting the property that secures 
                        the loan to a land bank, a nonprofit 
                        organization, or a State or local government, 
                        with additional funds provided for demolition 
                        and maintenance; or
                            ``(v) with the approval of the corporation, 
                        sale of the loan or the property that secures 
                        the loan to a nonprofit organization.
            ``(6) A qualifying nonprofit or a qualifying local 
        government that purchases a covered pool under paragraph 
        (3)(A)(iii) shall ensure that not less than 60 percent of the 
        loans in the pool result in not less than one of the outcomes 
        described in clauses (i) through (v) of paragraph (5)(B).
            ``(7)(A) Any entity that purchases a covered pool under 
        this subsection that contains a loan for which the property 
        securing the loan is vacant shall ensure that the servicer of 
        the loan--
                    ``(i) does not release the lien on the property; 
                and
                    ``(ii) maintains the property in accordance with 
                generally acceptable maintenance standards.
            ``(B) If the servicer of a loan described in subparagraph 
        (A) does not comply with the requirements of that subparagraph, 
        the entity that purchased the covered pool shall sell or donate 
        the loan to another entity, including a government or nonprofit 
        entity.
            ``(8) Nothing in this subsection shall be construed to 
        prevent the corporation from ensuring that a qualifying 
        nonprofit or a qualifying local government has the opportunity 
        to be the last bidder on a covered pool or a non-covered pool 
        under procedures other than those described in this section.
            ``(9) In addition to the requirements under this 
        subsection--
                    ``(A) any entity that purchases a non-covered pool 
                shall meet all of the requirements of the corporation 
                in effect on the day before the date of enactment of 
                this subsection; and
                    ``(B) the corporation may impose any other 
                requirements with respect to the purchase of a covered 
                pool or a non-covered pool that the corporation 
                determines are appropriate.''.

SEC. 4. LOANS INSURED BY THE FHA.

    Title II of the National Housing Act (12 U.S.C. 1707 et seq.) is 
amended by adding at the end the following:

``SEC. 259. SALE OF NON-PERFORMING MORTGAGES.

    ``(a) Definitions.--In this section--
            ``(1) the term `covered pool' means a pool of non-
        performing mortgages insured under this title--
                    ``(A) that contains not more than 300 mortgages;
                    ``(B) that is, to the extent practicable, 
                geographically concentrated; and
                    ``(C) for which the Secretary, with respect to the 
                sale of mortgages in the pool, encourages purchase of 
                the mortgages by qualifying nonprofits and qualifying 
                local governments;
            ``(2) the term `non-covered pool' means a pool of non-
        performing mortgages insured under this title that is not a 
        covered pool;
            ``(3) the term `qualifying local government' means a local 
        government that the Secretary has permitted to bid, after an 
        initial auction, on a covered pool or a non-covered pool; and
            ``(4) the term `qualifying nonprofit' means a nonprofit 
        organization that the Secretary has permitted to bid, after an 
        initial auction, on a covered pool or a non-covered pool.
    ``(b) Requirements.--
            ``(1) Covered pools.--The Secretary, with respect to an 
        auction for the sale of non-performing mortgages, shall ensure 
        that not fewer than 50 percent of the mortgages that are 
        offered for sale in the auction are mortgages in covered pools.
            ``(2) Non-covered pools.--The Secretary shall ensure that, 
        after an entity that is not a qualifying nonprofit or a 
        qualifying local government submits the highest bid on a non-
        covered pool, qualifying nonprofits and qualifying local 
        governments have the opportunity to submit a bid to purchase 
        not more than 5 percent of the mortgages in the non-covered 
        pool in accordance with the procedures set forth in subsection 
        (c)(2).
    ``(c) Procedures for Sale of Covered and Non-Covered Pools.--
            ``(1) Covered pools.--With respect to the sale of a covered 
        pool when a qualifying nonprofit or a qualifying local 
        government is a party bidding on the covered pool, the 
        Secretary shall--
                    ``(A) notify each bidder that a qualified nonprofit 
                or a qualifying local government is a bidder on the 
                covered pool;
                    ``(B) if, after receiving bids from each of the 
                bidders on the covered pool, the Secretary determines 
                that an entity that is not a qualifying nonprofit or a 
                qualifying local government submitted the highest 
                overall bid--
                            ``(i) disclose to the qualifying nonprofit 
                        or qualifying local government that submitted 
                        the highest bid (among bids submitted by 
                        qualifying nonprofits and qualifying local 
                        governments) the amount of the highest overall 
                        bid that was submitted;
                            ``(ii) provide the qualifying nonprofit or 
                        qualifying local government that submitted the 
                        highest bid with an opportunity to, not later 
                        than 2 days after receiving notice from the 
                        Secretary, submit a bid in an amount greater 
                        than the highest overall bid; and
                            ``(iii) if a qualifying nonprofit or 
                        qualifying local government, as applicable, 
                        described in clause (ii) chooses not to submit 
                        a bid as described in that clause, provide each 
                        successive qualifying nonprofit or qualifying 
                        local government that submitted the next 
                        highest bid with an opportunity to, not later 
                        than 2 days after receiving notice from the 
                        Secretary and a disclosure described in clause 
                        (i), submit a bid in an amount greater than the 
                        highest overall bid; and
                    ``(C) sell the covered pool to a qualifying 
                nonprofit or a qualifying local government if a 
                qualifying nonprofit or qualifying local government, as 
                applicable, under clause (ii) or (iii) of subparagraph 
                (B), submits a bid in an amount greater than the 
                highest overall bid.
            ``(2) Non-covered pools.--
                    ``(A) In general.--With respect to the sale of a 
                non-covered pool--
                            ``(i) not later than 2 days after the date 
                        on which an entity that is not a qualifying 
                        nonprofit or a qualifying local government 
                        submits the highest overall bid on the non-
                        covered pool--
                                    ``(I) the Secretary shall disclose 
                                to qualifying nonprofits and qualifying 
                                local governments the amount of the 
                                highest overall bid submitted on the 
                                non-covered pool, including the amount 
                                of the bid for each individual mortgage 
                                in the non-covered pool; and
                                    ``(II) a qualifying nonprofit or a 
                                qualifying local government may submit 
                                to the Secretary a bid to purchase not 
                                more than 5 percent of the mortgages in 
                                the non-covered pool;
                            ``(ii) except as provided in subparagraphs 
                        (B) and (C), the Secretary shall sell a 
                        mortgage described in clause (i)(II) to a 
                        qualifying nonprofit or qualifying local 
                        government, as applicable, if, with respect to 
                        that mortgage, the bid of the qualifying 
                        nonprofit or qualifying local government is 
                        equal to or more than the bid of the entity 
                        that submitted the highest overall bid for the 
                        non-covered pool; and
                            ``(iii) the total number of mortgages sold 
                        under clause (ii) may not exceed 10 percent of 
                        the number of mortgages in the non-covered 
                        pool.
                    ``(B) Selection by the secretary.--The Secretary 
                shall determine which mortgages in a non-covered pool 
                shall be sold to a qualifying nonprofit or a qualifying 
                local government if the aggregate number of mortgages 
                sold under subparagraph (A)(ii) to qualifying 
                nonprofits and qualifying local governments would 
                violate subparagraph (A)(iii).
                    ``(C) Multiple high bids.--If, under subparagraph 
                (A)(i)(II), more than 1 qualifying nonprofit or 
                qualifying local government submits a bid for a 
                mortgage that is equal to or higher than the bid 
                submitted by the entity that had submitted the highest 
                overall bid, the Secretary shall sell the mortgage to 
                the qualifying nonprofit or qualifying local government 
                that submitted the highest bid.
    ``(d) Application.--Before submitting a bid with respect to a 
covered pool or a non-covered pool, a nonprofit organization or local 
government, in order to be considered a qualifying nonprofit or 
qualifying local government, as applicable, shall submit to the 
Secretary an application containing such information as the Secretary 
determines appropriate.
    ``(e) Additional Requirements for Covered Pools.--
            ``(1) In general.--Any entity that purchases a covered pool 
        under this section--
                    ``(A) may not foreclose on any of the occupied 
                properties that secure mortgages in the pool during the 
                12-month period following the purchase; and
                    ``(B) shall ensure that, not later than 4 years 
                after the settlement date, not less than 50 percent of 
                the mortgages in the pool result in--
                            ``(i) a modified mortgage that--
                                    ``(I) has a loan-to-value ratio 
                                after the modification of the mortgage 
                                that is not greater than 115 percent;
                                    ``(II) performs over a period of 
                                not less than 6 months;
                                    ``(III) does not include an up-
                                front fee or require prepayment of any 
                                amount of the mortgage debt; and
                                    ``(IV)(aa) is fixed rate for the 
                                entire period in which the mortgage 
                                being modified is in effect; or
                                    ``(bb) offers an initial period in 
                                which the interest rate is reduced and 
                                an increase in the interest rate is 
                                limited to not more than 1 percent per 
                                year after an initial 5-year period in 
                                which the interest rate is fixed, with 
                                a maximum interest rate not exceeding 
                                the prevailing market rate for 
                                mortgages;
                            ``(ii) a short sale of the property that 
                        secures the mortgage to an owner-occupant;
                            ``(iii) with respect to a qualifying 
                        nonprofit or a qualifying local government that 
                        purchases a covered pool under subsection 
                        (c)(1)(C), holding the property that secures 
                        the mortgage for rental for a period of not 
                        less than 3 years, where such rental is 
                        affordable to a household with an annual income 
                        at or below the area median income;
                            ``(iv) with the approval of the Secretary, 
                        gifting the property that secures the mortgage 
                        to a land bank, a nonprofit organization, or a 
                        State or local government, with additional 
                        funds provided for demolition and maintenance; 
                        and
                            ``(v) with the approval of the Secretary, 
                        sale of the mortgage or the property that 
                        secures the mortgage to a nonprofit 
                        organization.
            ``(2) Qualifying nonprofits and local governments.--A 
        qualifying nonprofit or a qualifying local government that 
        purchases a covered pool under subsection (c)(1)(C) shall 
        ensure that not less than 60 percent of the mortgages in the 
        pool result in not less than one of the outcomes described in 
        clauses (i) through (v) of paragraph (1)(B).
            ``(3) Vacant properties.--
                    ``(A) In general.--Any entity that purchases a 
                covered pool under this section that contains a 
                mortgage for which the property securing the mortgage 
                is vacant shall ensure that the servicer of the 
                mortgage--
                            ``(i) does not release the lien on the 
                        property; and
                            ``(ii) maintains the property in accordance 
                        with generally acceptable maintenance 
                        standards.
                    ``(B) Sale of mortgage.--If the servicer of a 
                mortgage described in subparagraph (A) does not comply 
                with the requirements of that subparagraph, the entity 
                that purchased the covered pool shall sell or donate 
                the mortgage to another entity, including a government 
                or nonprofit entity.
    ``(f) Rule of Construction.--Nothing in this section shall be 
construed to prevent the Secretary from ensuring that a qualifying 
nonprofit or a qualifying local government has the opportunity to be 
the last bidder on a covered pool or a non-covered pool under 
procedures other than those described in this section.
    ``(g) Additional Requirements.--In addition to the requirements 
under this section--
            ``(1) any entity that purchases a non-covered pool shall 
        meet all of the requirements of the Secretary in effect on the 
        day before the date of enactment of this section; and
            ``(2) the Secretary may impose any other requirements with 
        respect to the purchase of a covered pool or a non-covered pool 
        that the Secretary determines are appropriate.''.
                                 <all>