[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 5342 Introduced in Senate (IS)]

<DOC>






117th CONGRESS
  2d Session
                                S. 5342

 To provide requirements for the bulk auction or group sale of certain 
             non-performing loans, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           December 21, 2022

Mr. Reed (for himself, Mr. Brown, Mr. Wyden, and Ms. Smith) introduced 
the following bill; which was read twice and referred to the Committee 
                 on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
 To provide requirements for the bulk auction or group sale of certain 
             non-performing loans, 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 ``Preserving Homes and Communities Act 
of 2022''.

SEC. 2. SALE OF FHA NON-PERFORMING SINGLE FAMILY MORTGAGE LOANS.

    (a) In General.--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 SINGLE FAMILY MORTGAGE LOANS.

    ``(a) Single Family Sales.--The Secretary may conduct sales of 1 or 
more of single family non-performing residential mortgage loans insured 
under this title only if the following requirements are met:
            ``(1) The Secretary determines that no other reasonable 
        measures other than a sale are available to restore the Fund 
        to, or keep the Fund above, the minimum capital requirements 
        under section 205(f)(4).
            ``(2) The Secretary establishes a system that provides 
        priority to Federal, State, local, or Tribal governments or 
        nonprofit organizations that have the capacity and experience 
        required for buying, servicing, and resolving single family 
        mortgage loans in a manner that promotes affordable housing, 
        fair housing, affordable homeownership, housing counseling, or 
        neighborhood stabilization.
            ``(3) Applicable loss mitigation required under section 230 
        is exhausted before any loan is placed into the loan sale.
            ``(4) Clear, written notice is sent by certified and first-
        class mail by the servicer to the borrower of the loan, all 
        owners of record, and any applicable estate of the borrower 
        with a copy sent to the Secretary, not less than 90 days before 
        the inclusion of the loan in any single family sale--
                    ``(A) stating that the loan will be included in a 
                single family sale of non-performing loans; and
                    ``(B) describing the sale process, including--
                            ``(i) the loss mitigation or other 
                        protections available to the borrower and other 
                        owners of record both before and after the 
                        sale;
                            ``(ii) the status of any loss mitigation 
                        actions offered by the mortgagee with respect 
                        to the loan, including decisions on all loss 
                        mitigation reviews, descriptions of any loss 
                        mitigation options offered or denied, and 
                        supporting documentation for the most recent 
                        evaluation; and
                            ``(iii) the obligations of the servicer of 
                        the loan before and after the sale, including 
                        loss mitigation requirements.
            ``(5) Purchasers take loans subject to the following 
        requirements:
                    ``(A) The provision of loss mitigation options to 
                all eligible borrowers that offer terms and protections 
                at least as favorable as those available under loss 
                mitigation guidelines of the Federal Housing 
                Administration, including the absence of fees for loss 
                mitigation and loan modifications that reduce payments 
                to an affordable level.
                    ``(B) Written, public disclosure of post-sale loss 
                mitigation options.
                    ``(C) Failure by the purchaser to follow the 
                established loss mitigation guidelines shall serve as a 
                defense to a judicial foreclosure and a basis to enjoin 
                or otherwise stay a non-judicial foreclosure.
                    ``(D) Data reporting as provided under subsection 
                (c)(1).
                    ``(E) Maintenance of vacant and abandoned property, 
                including the payment of local property taxes, until 
                such time as title is transferred to a nonprofit 
                organization or the property is sold to a bona fide 
                third-party purchaser.
                    ``(F) Where a property becomes vacant, the 
                purchaser shall not release the lien until the property 
                is sold or donated.
                    ``(G) Use of contract for deed, lease to own, or a 
                land installment contract to sell or otherwise transfer 
                any property that is secured by a purchased loan shall 
                be prohibited unless the tenant or purchaser is a 
                nonprofit organization.
                    ``(H) For all non-performing loans where a home 
                retention loss mitigation option is not possible and 
                the purchaser acquires the property through foreclosure 
                sale, 75 percent of those properties shall be--
                            ``(i) sold at the current fair market value 
                        to an owner occupant;
                            ``(ii) sold or donated to a nonprofit or 
                        local government entity that will commit to 1 
                        of the outcomes described in clause (i) or 
                        (iii);
                            ``(iii) for not less than the 10-year 
                        period beginning on the date on which any 
                        entity initially leases the property, and with 
                        respect to any new lease beginning within such 
                        10-year period, leased to a tenant with income 
                        that is not more than 100 percent of the area 
                        median income at the time the tenant initially 
                        leases the property, with monthly rents that 
                        are not more than 30 percent of the monthly 
                        household income, provided that the property 
                        owner accepts as rental payment any legal 
                        source of income, including--
                                    ``(I) a housing voucher under 
                                section 8 of the United States Housing 
                                Act of 1937 (42 U.S.C. 1437f) and any 
                                form of Federal, State, or local 
                                housing assistance provided to a person 
                                or family or provided to a housing 
                                owner on behalf of a person or family, 
                                including--
                                            ``(aa) rental vouchers;
                                            ``(bb) rental assistance;
                                            ``(cc) rental subsidies 
                                        from nongovernmental 
                                        organizations; and
                                            ``(dd) homeownership 
                                        subsidies;
                                    ``(II) income received as a monthly 
                                benefit under title II of the Social 
                                Security Act (42 U.S.C. 401 et seq.), 
                                as a supplemental security income 
                                benefit under title XVI of the Social 
                                Security Act (42 U.S.C. 1381 et seq.), 
                                or as a benefit under the Railroad 
                                Retirement Act of 1974 (45 U.S.C. 231 
                                et seq.), including any such benefit to 
                                which the individual is entitled for 
                                which payment is made to a 
                                representative payee;
                                    ``(III) income received by court 
                                order, including spousal support and 
                                child support;
                                    ``(IV) any payment from a trust, 
                                guardian, conservator, cosigner, or 
                                relative; and
                                    ``(V) any other lawful source of 
                                income or funds, including savings 
                                accounts and investments; or
                            ``(iv) for any property that is not 
                        habitable, demolished or donated to a land bank 
                        with a cash donation to cover demolition costs.
    ``(b) Direct Loan Sales.--The Secretary may permit direct loan 
sales of single family non-performing residential loans insured under 
this title only if--
            ``(1) the loans are sold to municipalities, land banks, or 
        nonprofit organizations that work in affordable housing, 
        housing counseling, or neighborhood stabilization;
            ``(2) the purchaser complies with the requirements under 
        paragraph (5) of subsection (a); and
            ``(3) the pricing reasonably reflects the costs of 
        complying with the requirements under paragraphs (3) through 
        (5) of subsection (a).
    ``(c) Data and Reporting.--
            ``(1) Purchaser reporting.--During the 4-year period 
        following any single family sale of non-performing residential 
        single family mortgage loans under subsection (a) or (b), the 
        Secretary shall require each purchaser of such a loan, 
        including any subsequent purchaser of the loan, to provide to 
        the Secretary quarterly loan-level data regarding the treatment 
        and outcome of the loan, including--
                    ``(A) loan characteristics, including loan type, 
                remaining loan term, loan to value ratio, number of 
                months in arrears, loss mitigation status, and 
                foreclosure status at time of sale;
                    ``(B) loss mitigation data, including whether loss 
                mitigation was provided by the purchaser, debt-to-
                income ratio and percent payment reduction for any 
                modified loans, foreclosures begun or completed, and 
                performance of modified loans;
                    ``(C) demographic data for the borrower and any co-
                borrower, including race, national origin, sex, ZIP 
                Code, and census tract, and, if available, disability 
                status and veteran status; and
                    ``(D) other purchaser actions, including charge 
                offs and resales of loans and dates for such actions.
            ``(2) Semiannual reports to congress.--The Secretary shall 
        submit to Congress, and make publicly available at no cost to 
        the public in a format that is readily accessible on the 
        website of the Department of Housing and Urban Development, 
        semi-annual reports to Congress on--
                    ``(A) loans sold in a single family sale under 
                subsection (a), disaggregated by pool, including--
                            ``(i) the number of loans and types of 
                        loans;
                            ``(ii) mean and median delinquency and loan 
                        to value ratios at the time of the sale;
                            ``(iii) the number and percentage of owner-
                        occupied properties;
                            ``(iv) the number and percentage of loans 
                        modified prior to the sale;
                            ``(v) the number and percentage of loans in 
                        foreclosure proceedings at the time of the 
                        sale; and
                            ``(vi) demographic and geographic data, 
                        including property locations by census tract or 
                        larger geographic location if necessary to 
                        protect personally identifiable information;
                    ``(B) the performance of loans after a single 
                family sale under subsection (a), disaggregated by loan 
                pool, including the initial purchaser, current owner, 
                current servicer, data summarizing any alternatives to 
                foreclosure offered and enacted, and data summarizing 
                the data collected under paragraph (1);
                    ``(C) the results of a fair lending analysis 
                conducted based on the data in paragraph (1) to 
                identify any discriminatory impacts or outcomes 
                associated with the sales; and
                    ``(D) claims paid through the Claims Without 
                Conveyance of Title program under section 204(a)(1)(C), 
                including the number of third-party sales by ZIP Code, 
                whether purchasers are owner-occupants, nonprofit 
                organizations, government entities, or investors, and 
                the source of funds or financing used by purchasers.
    ``(d) Penalties for Noncompliance.--The Secretary may--
            ``(1) forcibly retain loans or properties, without 
        providing compensation, from purchasers that do not meet the 
        requirements under subsection (a)(5); and
            ``(2) enact additional penalties for purchasers described 
        in paragraph (1) that the Secretary determines have repeatedly 
        not complied with the requirements under subsection (a)(5), 
        including monetary penalties and prohibition from participating 
        in single family sales under this section.
    ``(e) Regulations.--The Secretary shall issue regulations related 
to single family sales in accordance with the requirements in this 
section.

``SEC. 260. CLAIMS WITHOUT CONVEYANCE OF TITLE FIRST LOOK PROGRAM.

    ``(a) Claims Without Conveyance of Title First Look Program.--With 
respect to a third-party sale of properties foreclosed upon and put up 
for sale in accordance with section 204(a)(1)(C), the Secretary shall 
maintain an exclusive right for eligible buyers to purchase these 
properties at a price at or below the fair market value of the property 
(with appropriate adjustments) for a specified period of time at the 
start of post-foreclosure sale efforts.
    ``(b) Eligible Buyers.--The right to purchase a property under 
subsection (a) shall be offered to--
            ``(1) homebuyers who will occupy the property as a 
        principal residence;
            ``(2) nonprofit organizations that--
                    ``(A) commit in advance to rehabilitate the 
                property and dispose of the property for an allowable 
                use and within a time period to be designated by the 
                Secretary by regulation; and
                    ``(B) are pre-approved for participation by the 
                Secretary or a designee thereof to ensure that the 
                organization--
                            ``(i) maintains active tax-exempt status 
                        under section 501(c)(3) of the Internal Revenue 
                        Code;
                            ``(ii) has a primary mission related to--
                                    ``(I) affordable housing; or
                                    ``(II) community revitalization 
                                through housing-related activities; and
                            ``(iii) has demonstrated not less than 2 
                        years of direct experience with real estate 
                        project development as an organizational 
                        entity; and
            ``(3) Federal, State, local, or Tribal government agencies 
        or instrumentalities that meet the requirements of subparagraph 
        (A) and clauses (ii) and (iii) of subparagraph (B) of paragraph 
        (2).
    ``(c) Allowable Uses.--An allowable use described in this 
subsection shall include--
            ``(1) renovation and sale, or, if the property already 
        meets the minimum property standards set by the Assistant 
        Secretary for Housing and Federal Housing Commissioner, sale 
        without renovation, to an owner-occupant with an income that is 
        not more than 120 percent of the area median income;
            ``(2) renovation and creation of affordable homeownership 
        or, if the property already meets the minimum property 
        standards set by the Assistant Secretary for Housing and 
        Federal Housing Commissioner, creation of affordable 
        homeownership without renovation, by a community land trust or 
        shared equity homeownership program;
            ``(3) renovation and rental to tenants with an income that 
        is not more than 100 percent of the area median income at the 
        time the tenant initially leases the property, with monthly 
        rents that are not more than 30 percent of the monthly 
        household income, for not less than the 10-year period 
        beginning on the date on which any entity initially leases the 
        property, and with respect to any new lease beginning within 
        such 10-year period, provided that the property owner accepts 
        as rental payment any legal source of income, including--
                    ``(A) a housing voucher under section 8 of the 
                United States Housing Act of 1937 (42 U.S.C. 1437f) and 
                any form of Federal, State, or local housing assistance 
                provided to a person or family or provided to a housing 
                owner on behalf of a person or family, including--
                            ``(i) rental vouchers;
                            ``(ii) rental assistance;
                            ``(iii) rental subsidies from 
                        nongovernmental organizations; and
                            ``(iv) homeownership subsidies;
                    ``(B) income received as a monthly benefit under 
                title II of the Social Security Act (42 U.S.C. 401 et 
                seq.), as a supplemental security income benefit under 
                title XVI of the Social Security Act (42 U.S.C. 1381 et 
                seq.), or as a benefit under the Railroad Retirement 
                Act of 1974 (45 U.S.C. 231 et seq.), including any such 
                benefit to which the individual is entitled for which 
                payment is made to a representative payee;
                    ``(C) income received by court order, including 
                spousal support and child support;
                    ``(D) any payment from a trust, guardian, 
                conservator, cosigner, or relative; and
                    ``(E) any other lawful source of income or funds, 
                including savings accounts and investments; and
            ``(4) demolition, but only if the property is vacant or 
        uninhabitable and if the demolition is part of a strategy that 
        incorporates rehabilitation, new construction, or designation 
        of the land for use as a public amenity.
    ``(d) Reporting Requirements.--
            ``(1) In general.--Each purchaser of a property under this 
        section, other than an owner-occupant, shall, on an annual 
        basis until the purchaser completes the allowable use of the 
        property under subsection (c), report to the Secretary--
                    ``(A) the start date and completion date of any 
                rehabilitation;
                    ``(B) the scope of work for and the total cost of 
                any rehabilitation;
                    ``(C) the end-use of the property, including sale 
                to owner-occupant, use in a land trust or other shared 
                equity program, or affordable rental;
                    ``(D) the demographics of the end-user of the 
                property, whether an owner-occupant or a tenant, 
                including race, national origin, sex, ZIP Code, and 
                census tract, and, if available, disability status and 
                veteran status; and
                    ``(E) the approximate income of the end-user of the 
                property expressed as a percentage of the area median 
                income.
            ``(2) Availability.--The Secretary shall, on an annual 
        basis, make the information collected under paragraph (1) 
        publicly available at no cost to the public in a readily 
        accessible format on the website of the Department of Housing 
        and Urban Development.
    ``(e) Use of Third-Party Vendors.--The Secretary may contract with 
a third-party vendor to assist in carrying out the provisions of this 
section, including to--
            ``(1) pre-approve nonprofit organizations for participation 
        in the Claims Without Conveyance of Title First Look program;
            ``(2) monitor compliance with allowable uses and time 
        periods designated by the Secretary by regulation; and
            ``(3) facilitate reporting to the Secretary.
    ``(f) Access.--The Secretary shall ensure that any eligible buyer 
seeking to purchase a property under this section can easily access and 
inspect the property prior to making a commitment to purchase the 
property.''.
    (b) Regulations.--Not later than 18 months after the date of 
enactment of this Act, the Secretary of Housing and Urban Development 
shall promulgate regulations to carry out the amendments made by this 
section.

SEC. 3. SALE OF FANNIE MAE AND FREDDIE MAC NON-PERFORMING LOANS.

    The Federal Housing Enterprises Financial Safety and Soundness Act 
of 1992 (12 U.S.C. 4501 et seq.) is amended by inserting after section 
1328 (12 U.S.C. 4548) the following:

``SEC. 1329. SALE OF NON-PERFORMING LOANS.

    ``(a) Bulk Auction or Group Sales.--An enterprise may not conduct 
bulk auctions or other group sales of single family non-performing 
residential loans unless the following requirements are met:
            ``(1) The enterprise establishes a system that provides 
        priority to Federal, State, local, or Tribal governments or 
        nonprofit organizations that have the capacity and experience 
        required for buying, servicing, and resolving single family 
        mortgage loans in a manner that promotes affordable housing, 
        fair housing, affordable homeownership, provision of housing 
        counseling, or neighborhood stabilization.
            ``(2) Applicable loss mitigation is exhausted before a loan 
        may be placed into the bulk auction or group sale.
            ``(3) Clear, written notice is sent by the enterprise or 
        servicer through certified and first-class mail to the borrower 
        and all owners of record, with a copy sent to the enterprise if 
        sent by the servicer, not less than 90 days before the 
        inclusion of the loan in any proposed sale--
                    ``(A) stating that the loan will be included in a 
                bulk auction or group sale of non-performing loans; and
                    ``(B) describing the bulk auction or group sale 
                process, including--
                            ``(i) the loss mitigation or other 
                        protections available to the borrower and other 
                        owners of record both before and after the 
                        auction or sale;
                            ``(ii) the status of any loss mitigation 
                        actions offered by the mortgagee with respect 
                        to the loan, including decisions on all loss 
                        mitigation reviews, descriptions of any loss 
                        mitigation options offered or denied, and 
                        supporting documentation for the most recent 
                        evaluation; and
                            ``(iii) the obligations of the servicer of 
                        the loan before and after the auction or sale, 
                        including loss mitigation requirements.
            ``(4) The enterprise requires in the terms of the bulk 
        auction or group sale that purchasers take loans subject to the 
        following requirements:
                    ``(A) The purchaser is required to provide loss 
                mitigation options to all eligible borrowers that offer 
                terms and protections at least as favorable as those 
                available under loss mitigation guidelines of the 
                enterprise, including the absence of fees for loss 
                mitigation and loan modifications that reduce payments 
                to an affordable level.
                    ``(B) The purchaser is required to provide written, 
                public disclosure of post-sale loss mitigation options 
                that the purchaser makes available to eligible 
                borrowers.
                    ``(C) Failure by the purchaser to follow the 
                established loss mitigation guidelines shall serve as a 
                defense to a judicial foreclosure and a basis to enjoin 
                or otherwise stay a non-judicial foreclosure.
                    ``(D) Data reporting as provided under subsection 
                (b)(2).
                    ``(E) If a property becomes vacant, the purchaser 
                shall not release the lien until the property is sold 
                or donated.
                    ``(F) Use of contract for deed, lease to own, or a 
                land installment contract to sell or otherwise transfer 
                any property that is secured by a purchased loan shall 
                be prohibited unless the tenant or purchaser is a 
                nonprofit organization without obtaining prior 
                permission from the enterprise.
                    ``(G) For all non-performing loans where a home-
                retention loss mitigation option is not possible and 
                the purchaser acquires the property through foreclosure 
                sale, 75 percent of those properties shall be--
                            ``(i) sold at the current fair market value 
                        to an owner-occupant;
                            ``(ii) sold or donated to a nonprofit or 
                        local government entity that will commit to 1 
                        of the outcomes described in clause (i) or 
                        (iii);
                            ``(iii) for not less than the 10-year 
                        period beginning on the date on which any 
                        entity initially leases the property, and with 
                        respect to any new lease beginning within such 
                        10-year period, leased to a tenant with an 
                        income that is not more than 100 percent of the 
                        area median income at the time the tenant 
                        initially leases the property, with monthly 
                        rents that are not more than 30 percent of the 
                        monthly household income, provided that the 
                        property owner accepts as rental payment any 
                        legal source of income, including--
                                    ``(I) a housing voucher under 
                                section 8 of the United States Housing 
                                Act of 1937 (42 U.S.C. 1437f) and any 
                                form of Federal, State, or local 
                                housing assistance provided to a person 
                                or family or provided to a housing 
                                owner on behalf of a person or family, 
                                including--
                                            ``(aa) rental vouchers;
                                            ``(bb) rental assistance;
                                            ``(cc) rental subsidies 
                                        from nongovernmental 
                                        organizations; and
                                            ``(dd) homeownership 
                                        subsidies;
                                    ``(II) income received as a monthly 
                                benefit under title II of the Social 
                                Security Act (42 U.S.C. 401 et seq.), 
                                as a supplemental security income 
                                benefit under title XVI of the Social 
                                Security Act (42 U.S.C. 1381 et seq.), 
                                or as a benefit under the Railroad 
                                Retirement Act of 1974 (45 U.S.C. 231 
                                et seq.), including any such benefit to 
                                which the individual is entitled for 
                                which payment is made to a 
                                representative payee;
                                    ``(III) income received by court 
                                order, including spousal support and 
                                child support;
                                    ``(IV) any payment from a trust, 
                                guardian, conservator, cosigner, or 
                                relative; and
                                    ``(V) any other lawful source of 
                                income or funds, including savings 
                                accounts and investments; or
                            ``(iv) for any property that is not 
                        habitable, demolished or donated to a land bank 
                        with a cash donation to cover demolition costs.
            ``(5) The enterprise maintains vacant and abandoned 
        property until such time as title is transferred to a nonprofit 
        organization or the property is sold to a bona fide third-party 
        purchaser.
    ``(b) Data and Reporting.--
            ``(1) Purchaser reporting.--During the 4-year period 
        following any auction or sale of single family non-performing 
        residential mortgage loans under subsection (a), the Director 
        shall require the enterprise to collect from each purchaser of 
        such loans, including any subsequent purchaser of a loan, 
        quarterly loan-level data regarding the treatment and outcome 
        of the loan, including--
                    ``(A) loan characteristics, including loan type, 
                remaining loan term, loan to value ratio, number of 
                months in arrears, loss mitigation status, and 
                foreclosure status at time of sale;
                    ``(B) loss mitigation data, including whether loss 
                mitigation was provided by the purchaser, debt-to-
                income ratio and percent payment reduction for any 
                modified loans, foreclosures begun or completed, and 
                performance of modified loans;
                    ``(C) demographic data for each borrower and any 
                co-borrower, including race, national origin, sex, ZIP 
                Code, and census tract, and, if available, disability 
                status and veteran status; and
                    ``(D) other purchaser actions, including charge 
                offs and resales of loans and dates for such actions.
            ``(2) Semiannual reports to congress.--The Director shall 
        submit to Congress, and make publicly available at no cost to 
        the public in a readily accessible format on the website of the 
        Agency, semi-annual reports on--
                    ``(A) loans sold in an auction or sale under 
                subsection (a) by each enterprise, disaggregated by 
                pool, including--
                            ``(i) the number of loans and types of 
                        loans;
                            ``(ii) mean and median delinquency and loan 
                        to value ratios at the time of the sale;
                            ``(iii) the number and percentage of owner-
                        occupied properties;
                            ``(iv) the number and percentage of loans 
                        modified prior to auction or sale;
                            ``(v) the number and percentage of loans in 
                        foreclosure proceedings at the time of auction 
                        or sale; and
                            ``(vi) demographic and geographic data, 
                        including property locations by census tract or 
                        larger geographic location if necessary to 
                        protect personally identifiable information;
                    ``(B) the performance of loans after an auction or 
                sale under subsection (a), disaggregated by loan pool, 
                including the initial purchaser, current owner, current 
                servicer, data summarizing any alternatives to 
                foreclosure offered and enacted, and data summarizing 
                the data collected under subparagraph (A); and
                    ``(C) the results of a fair lending analysis 
                conducted based on the data in subparagraphs (A) and 
                (B) to identify any discriminatory impacts or outcomes 
                associated with the auctions or sales.
    ``(c) Penalties for Noncompliance.--The enterprises may--
            ``(1) forcibly retain loans or properties, without 
        providing compensation, from purchasers that do not meet the 
        requirements under subsection (a)(4); and
            ``(2) enact additional penalties for purchasers described 
        in paragraph (1) that the Director determines have repeatedly 
        not complied with the requirements under subsection (a)(5), 
        including monetary penalties and prohibition from participating 
        in sales under this section.
    ``(d) Regulations.--The Director shall issue regulations defining 
the terms of permissible auctions or sales in accordance with the 
requirements in this section.''.
                                 <all>