[Congressional Record Volume 155, Number 39 (Thursday, March 5, 2009)]
[House]
[Pages H2997-H3018]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


             HELPING FAMILIES SAVE THEIR HOMES ACT OF 2009

  The SPEAKER pro tempore. Pursuant to House Resolution 205 and rule 
XVIII, the Chair declares the House in the Committee of the Whole House 
on the State of the Union for the further consideration of the bill, 
H.R. 1106.

                              {time}  1215


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the State of the Union for the further consideration of 
the bill (H.R. 1106) to prevent mortgage foreclosures and enhance 
mortgage credit availability, with Mr. Salazar (Acting Chair) in the 
chair.
  The Clerk read the title of the bill.
  The Acting CHAIR. When the Committee of the Whole rose on Thursday, 
February 26, 2009, all time for general debate pursuant to House 
Resolution 190 had expired.
  Pursuant to House Resolution 205, amendment No. 1, printed in House 
Report 111-21, shall be considered as perfected by the modification 
printed in House Report 111-23.
  Pursuant to House Resolution 190, the bill shall be considered read 
for amendment under the 5-minute rule.
  The text of the bill is as follows:

                               H.R. 1106

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as ``Helping 
     Families Save Their Homes Act of 2009''.
       (b) Table of Contents.--The table of contents of this Act 
     is the following:

Sec. 1. Short title; table of contents.

              TITLE I--PREVENTION OF MORTGAGE FORECLOSURES

           Subtitle A--Modification of Residential Mortgages

Sec. 101. Eligibility for relief.
Sec. 102. Prohibiting claims arising from violations of the Truth in 
              Lending Act.
Sec. 103. Authority to modify certain mortgages.
Sec. 104. Combating excessive fees.
Sec. 105. Confirmation of plan.
Sec. 106. Discharge.
Sec. 107. Standing trustee fees.
Sec. 108. Effective date; application of amendments.

          Subtitle B--Related Mortgage Modification Provisions

Sec. 121. Adjustments as a result of modification in bankruptcy of 
              housing loans guaranteed by the department of veterans 
              affairs.
Sec. 122. Payment of FHA mortgage insurance benefits.
Sec. 123. Adjustments as result of modification of rural single family 
              housing loans in bankruptcy.
Sec. 124. Unenforceability of certain provision as being contrary to 
              public policy.

        TITLE II--FORECLOSURE MITIGATION AND CREDIT AVAILABILITY

Sec. 201. Servicer safe harbor for mortgage loan modifications.
Sec. 202. Changes to HOPE for Homeowners Program.
Sec. 203. Requirements for FHA-approved mortgagees.
Sec. 204. Enhancement of liquidity and stability of insured depository 
              institutions to ensure availability of credit and 
              reduction of foreclosures.

              TITLE I--PREVENTION OF MORTGAGE FORECLOSURES

           Subtitle A--Modification of Residential Mortgages

     SEC. 101. 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) The requirements of paragraph (1) shall not apply in 
     a case under chapter 13 with respect to a debtor 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.''.

     SEC. 102. 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. 103. 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, 80 percent of the 
     amount of the difference between the sales price and the 
     amount of such claim as originally determined under section 
     1322(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, 60 percent of the 
     amount of the difference between the sales price and the 
     amount of such claim as originally determined under section 
     1322(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, 40 percent of the 
     amount of the difference between the sales price and the 
     amount of such claim as originally determined under section 
     1322(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
       ``(4) if such residence is sold in the 4th year occurring 
     after the effective date of the plan, 20 percent of the 
     amount of the difference between the sales price and the 
     amount of such claim as originally determined under section 
     1322(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 15-day period beginning on the effective 
     date of this subsection, unless--

[[Page H2998]]

       ``(A) the debtor certifies that the debtor attempted, not 
     less than 15 days before the commencement of the case, 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; or
       ``(B) a foreclosure sale is scheduled to occur on a date in 
     the 30-day period beginning on the date the 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.''.

     SEC. 104. 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. 105. CONFIRMATION OF PLAN.

       Section 1325(a) of title 11, United States Code, is 
     amended--
       (1) in paragraph (5) by inserting ``except as otherwise 
     provided in section 1322(b)(11),'' after ``(5)'',
       (2) in paragraph (8) by striking ``and'' at the end,
       (3) in paragraph (9) by striking the period at the end and 
     inserting a semicolon, and
       (4) 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 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.''.

     SEC. 106. 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. 107. 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. 108. 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.

          Subtitle B--Related Mortgage Modification Provisions

     SEC. 121. ADJUSTMENTS AS A RESULT OF MODIFICATION IN 
                   BANKRUPTCY OF HOUSING LOANS GUARANTEED BY THE 
                   DEPARTMENT OF VETERANS AFFAIRS.

       (a) In General.--Subsection (a) of section 3732 of title 
     38, United States Code is amended--
       (1) in subsection (a)--
       (A) by redesignating paragraph (2) as subparagraph (A) of 
     paragraph (2), and
       (2) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) In the event that a housing loan guaranteed under 
     this chapter is modified under the authority provided under 
     section 1322(b) of title 11, United States Code, the 
     Secretary may pay the holder of the obligation the unpaid 
     balance of the obligation due as of the date of the filing of 
     the petition under title 11, United States Code, plus accrued 
     interest, but only upon the assignment, transfer, and 
     delivery to the Secretary (in a form and manner satisfactory 
     to the Secretary) of all rights, interest, claims, evidence, 
     and records with respect to the housing loan.''.
       (b) Maturity of Housing Loans.--Paragraph (1) of section 
     (d) of section 3703 of title 38, United States Code, is 
     amended by inserting ``at the time of origination'' after 
     ``loan''.
       (c) Implementation.--The Secretary of Veterans Affairs may 
     implement the amendments made by this section through notice, 
     procedure notice, or administrative notice.

     SEC. 122. PAYMENT OF FHA MORTGAGE INSURANCE BENEFITS.

       (a) In General.--Subsection (a) of section 204 of the 
     National Housing Act (12 U.S.C. 1710(a)) is amended--
       (1) in paragraph (1), by adding at the end the following 
     new subparagraph:
       ``(E) Modification of mortgage in bankruptcy.--
       ``(i) Authority.--If an order is entered under the 
     authority provided under section 1322(b) of title 11, United 
     States Code, that (a) determines the amount of an allowed 
     secured claim under a mortgage in accordance with section 
     506(a)(1) of title 11, United States Code, and the amount of 
     such allowed secured claim is less than the amount due under 
     the mortgage as of the date of the filing of the petition 
     under title 11, United States Code, or (b) reduces the 
     interest to be paid under a mortgage in accordance with 
     section 1325 of such title, the Secretary may pay insurance 
     benefits for the mortgage as follows:

       ``(I) Full payment and assignment.--The Secretary may pay 
     the insurance benefits for the mortgage, but only upon the 
     assignment, transfer, and delivery to the Secretary of all 
     rights, interest, claims, evidence, and records with respect 
     to the mortgage specified in clauses (i) through (iv) of 
     paragraph (1)(A). The insurance benefits shall be paid in the 
     amount equal to the original principal obligation of the 
     mortgage (with such additions and deductions as the Secretary 
     determines are appropriate) which was unpaid upon the date of 
     the filing of by the mortgagor of the petition under title 11 
     of the United States Code. Nothing in this Act may be 
     construed to prevent the Secretary from providing insurance 
     under this title for a mortgage that has previously been 
     assigned to the Secretary under this subclause. The decision 
     of whether to utilize the authority under this subclause for 
     payment and assignment shall be at the election of the 
     mortgagee, subject to such terms and conditions as the 
     Secretary may establish.
       ``(II) Assignment of unsecured claim.--The Secretary may 
     make a partial payment of the insurance benefits for any 
     unsecured claim under the mortgage, but only upon the 
     assignment to the Secretary of any unsecured claim of the 
     mortgagee against the mortgagor or others arising out of such 
     order. Such assignment shall be deemed valid irrespective of 
     whether such claim has been or will be discharged under title 
     11 of the United States Code. The insurance benefits shall be 
     paid in the amount specified in subclause (I) of this clause, 
     as such amount

[[Page H2999]]

     is reduced by the amount of the allowed secured claim. Such 
     allowed secured claim shall continue to be insured under 
     section 203.
       ``(III) Interest payments.--The Secretary may make periodic 
     payments, or a one-time payment, of insurance benefits for 
     interest payments that are reduced pursuant to such order, as 
     determined by the Secretary, but only upon assignment to the 
     Secretary of all rights and interest related to such 
     payments.

       ``(ii) Delivery of evidence of entry of order.--
     Notwithstanding any other provision of this paragraph, no 
     insurance benefits may be paid pursuant to this subparagraph 
     for a mortgage before delivery to the Secretary of evidence 
     of the entry of the order issued pursuant to title 11, United 
     States Code, in a form satisfactory to the Secretary.'';
       (2) in paragraph (5), in the matter preceding subparagraph 
     (A), by inserting after ``section 520, and'' the following: 
     ``, except as provided in paragraph (1)(E),''; and
       (3) by adding at the end the following new paragraph:
       ``(10) Loan modification program.--
       ``(A) Authority.--The Secretary may carry out a program 
     solely to encourage loan modifications for eligible 
     delinquent mortgages through the payment of insurance 
     benefits and assignment of the mortgage to the Secretary and 
     the subsequent modification of the terms of the mortgage 
     according to a loan modification approved by the mortgagee.
       ``(B) Payment of benefits and assignment.--Under the 
     program under this paragraph, the Secretary may pay insurance 
     benefits for a mortgage, in the amount determined in 
     accordance with paragraph (5)(A), without reduction for any 
     amounts modified, but only upon the assignment, transfer, and 
     delivery to the Secretary of all rights, interest, claims, 
     evidence, and records with respect to the mortgage specified 
     in clauses (i) through (iv) of paragraph (1)(A).
       ``(C) Disposition.--After modification of a mortgage 
     pursuant to this paragraph, the Secretary may provide 
     insurance under this title for the mortgage. The Secretary 
     may subsequently--
       ``(i) re-assign the mortgage to the mortgagee under terms 
     and conditions as are agreed to by the mortgagee and the 
     Secretary;
       ``(ii) act as a Government National Mortgage Association 
     issuer, or contract with an entity for such purpose, in order 
     to pool the mortgage into a Government National Mortgage 
     Association security; or
       ``(iii) re-sell the mortgage in accordance with any program 
     that has been established for purchase by the Federal 
     Government of mortgages insured under this title, and the 
     Secretary may coordinate standards for interest rate 
     reductions available for loan modification with interest 
     rates established for such purchase.
       ``(D) Loan servicing.--In carrying out the program under 
     this section, the Secretary may require the existing servicer 
     of a mortgage assigned to the Secretary under the program to 
     continue servicing the mortgage as an agent of the Secretary 
     during the period that the Secretary acquires and holds the 
     mortgage for the purpose of modifying the terms of the 
     mortgage. If the mortgage is resold pursuant to subparagraph 
     (C)(iii), the Secretary may provide for the existing servicer 
     to continue to service the mortgage or may engage another 
     entity to service the mortgage.''.
       (b) Amendment to Partial Claim Authority.--Paragraph (1) of 
     section 230(b) of the National Housing Act (12 U.S.C. 
     1715u(b)(1)) is amended by striking ``12 of the monthly 
     mortgage payments'' and inserting ``30 percent of the unpaid 
     principal balance of the mortgage''.
       (c) Implementation.--The Secretary of Housing and Urban 
     Development may implement the amendments made by this section 
     through notice or mortgagee letter.

     SEC. 123. ADJUSTMENTS AS RESULT OF MODIFICATION OF RURAL 
                   SINGLE FAMILY HOUSING LOANS IN BANKRUPTCY.

       (a) Guaranteed Rural Housing Loans.--Subsection (h) of 
     section 502 of the Housing Act of 1949 (42 U.S.C. 1472(h)) is 
     amended--
       (1) in paragraph (7)--
       (A) in subparagraph (A), by inserting before the period at 
     the end the following: ``, unless the maturity date of the 
     loan is modified in a bankruptcy proceeding or at the 
     discretion of the Secretary''; and
       (B) in subparagraph (B), by inserting before the semicolon 
     the following: ``, unless such rate is modified in a 
     bankruptcy proceeding'';
       (2) by redesignating paragraphs (13) and (14) as paragraphs 
     (14) and (15), respectively; and
       (3) by inserting after paragraph (12) the following new 
     paragraph:
       ``(13) Payment of guarantee.--In addition to all other 
     authorities to pay a guarantee claim, the Secretary may also 
     pay the guaranteed portion of any losses incurred by the 
     holder of a note or the servicer resulting from a 
     modification of a note by a bankruptcy proceeding.''.
       (b) Insured Rural Housing Loans.--Subsection (j) of section 
     517 of the Housing Act of 1949 (42 U.S.C. 1487(j)) is 
     amended--
       (1) by redesignating paragraphs (2) through (7) as 
     paragraphs (3) through (8), respectively; and
       (2) by inserting after paragraph (1) the following new 
     paragraph:
       ``(2) to pay for losses incurred by holders or servicers in 
     the event of a modification pursuant to a bankruptcy 
     proceeding;''.
       (c) Implementation.--The Secretary of Agriculture may 
     implement the amendments made by this section through notice, 
     procedure notice, or administrative notice.

     SEC. 124. UNENFORCEABILITY OF CERTAIN PROVISION AS BEING 
                   CONTRARY TO PUBLIC POLICY.

       No provision in any investment contract between a servicer 
     and a securitization vehicle or investor in effect as of the 
     date of enactment of this Act that requires excess bankruptcy 
     losses that exceed a certain dollar amount on residential 
     mortgages to be borne by classes of certificates on a pro 
     rata basis that refers to types of bankruptcy losses that 
     could not have been incurred under the law in effect at the 
     time such contract was entered into shall be enforceable, as 
     such provision shall be contrary to public policy.  
     Notwithstanding this section, such reference to types of 
     bankruptcy losses that could have been incurred under the law 
     in effect at the time such contract was entered into shall be 
     enforceable.

        TITLE II--FORECLOSURE MITIGATION AND CREDIT AVAILABILITY

     SEC. 201. SERVICER SAFE HARBOR FOR MORTGAGE LOAN 
                   MODIFICATIONS.

       (a) Safe Harbor.--
       (1) Loan modifications and workout plans.--Notwithstanding 
     any other provision of law, and notwithstanding any 
     investment contract between a servicer and a securitization 
     vehicle or investor, a servicer that acts consistent with the 
     duty set forth in section 129A(a) of Truth in Lending Act (15 
     U.S.C. 1639a) shall not be liable for entering into a loan 
     modification, workout, or other loss mitigation plan, 
     including, but not limited to, disposition with respect to 
     any such mortgage that meets all of the criteria set forth in 
     paragraph (2)(B) to--
       (A) any person, based on that person's ownership of a 
     residential mortgage loan or any interest in a pool of 
     residential mortgage loans or in securities that distribute 
     payments out of the principal, interest and other payments in 
     loans on the pool;
       (B) any person who is obligated pursuant to a derivatives 
     instrument to make payments determined in reference to any 
     loan or any interest referred to in subparagraph (A); or
       (C) any person that insures any loan or any interest 
     referred to in subparagraph (A) under any law or regulation 
     of the United States or any law or regulation of any State or 
     political subdivision of any State.
       (2) Ability to modify mortgages.--
       (A) Ability.--Notwithstanding any other provision of law, 
     and notwithstanding any investment contract between a 
     servicer and a securitization vehicle or investor, a 
     servicer--
       (i) shall not be limited in the ability to modify 
     mortgages, the number of mortgages that can be modified, the 
     frequency of loan modifications, or the range of permissible 
     modifications; and
       (ii) shall not be obligated to repurchase loans from or 
     otherwise make payments to the securitization vehicle on 
     account of a modification, workout, or other loss mitigation 
     plan for a residential mortgage or a class of residential 
     mortgages that constitute a part or all of the mortgages in 
     the securitization vehicle,

     if any mortgage so modified meets all of the criteria set 
     forth in subparagraph (B).
       (B) Criteria.--The criteria under this subparagraph with 
     respect to a mortgage are as follows:
       (i) Default on the payment of such mortgage has occurred or 
     is reasonably foreseeable.
       (ii) The property securing such mortgage is occupied by the 
     mortgagor of such mortgage.
       (iii) The servicer reasonably and in good faith believes 
     that the anticipated recovery on the principal outstanding 
     obligation of the mortgage under the particular modification 
     or workout plan or other loss mitigation action will exceed, 
     on a net present value basis, the anticipated recovery on the 
     principal outstanding obligation of the mortgage to be 
     realized through foreclosure.
       (3) Applicability.--This subsection shall apply only with 
     respect to modifications, workouts, and other loss mitigation 
     plans initiated before January 1, 2012.
       (b) Reporting.--Each servicer that engages in loan 
     modifications or workout plans subject to the safe harbor in 
     subsection (a) shall report to the Secretary on a regular 
     basis regarding the extent, scope and results of the 
     servicer's modification activities. The Secretary shall 
     prescribe regulations specifying the form, content, and 
     timing of such reports.
       (c) Definition of Securitization Vehicles.--For purposes of 
     this section, the term ``securitization vehicle'' means a 
     trust, corporation, partnership, limited liability entity, 
     special purpose entity, or other structure that--
       (1) is the issuer, or is created by the issuer, of mortgage 
     pass-through certificates, participation certificates, 
     mortgage-backed securities, or other similar securities 
     backed by a pool of assets that includes residential mortgage 
     loans; and
       (2) holds such mortgages.

     SEC. 202. CHANGES TO HOPE FOR HOMEOWNERS PROGRAM.

       (a) Program Changes.--Section 257 of the National Housing 
     Act (12 U.S.C. 1715z-23) is amended--
       (1) in subsection (c)--

[[Page H3000]]

       (A) in the heading for paragraph (1), by striking ``the 
     board'' and inserting ``secretary'';
       (B) in paragraph (1), by striking ``Board'' inserting 
     ``Secretary, after consultation with the Board,''; and
       (C) by adding after paragraph (2) the following:
       ``(3) Duties of board.--The Board shall advise the 
     Secretary regarding the establishment and implementation of 
     the HOPE for Homeowners Program.''.
       (2) by striking ``Board'' each place such term appears in 
     subsections (e), (h)(1), (h)(3), (j), (l), (n), (s)(3), and 
     (v) and inserting ``Secretary'';
       (3) in subsection (e)--
       (A) by striking paragraph (1) and inserting the following:
       ``(1) Borrower certification.--
       ``(A) No intentional default or false information.--The 
     mortgagor shall provide a certification to the Secretary that 
     the mortgagor has not intentionally defaulted on the existing 
     mortgage or mortgages and has not knowingly, or willfully and 
     with actual knowledge, furnished material information known 
     to be false for the purpose of obtaining the eligible 
     mortgage to be insured.
       ``(B) Liability for repayment.--The mortgagor shall agree 
     in writing that the mortgagor shall be liable to repay to the 
     Secretary any direct financial benefit achieved from the 
     reduction of indebtedness on the existing mortgage or 
     mortgages on the residence refinanced under this section 
     derived from misrepresentations made by the mortgagor in the 
     certifications and documentation required under this 
     paragraph, subject to the discretion of the Secretary.'';
       (B) in paragraph (7), by striking the semicolon and all 
     that follows through ``new second lien'';
       (C) in paragraph (9)--
       (i) by striking ``by procuring (A) an income tax return 
     transcript of the income tax return of the mortgagor, or 
     (B)'' and inserting ``in accordance with procedures and 
     standards that the Secretary shall establish, which may 
     include requiring the mortgagee to procure''; and
       (ii) by striking ``and by any other method, in accordance 
     with procedures and standards that the Board shall 
     establish''; and
       (D) by adding after paragraph (11) the following new 
     paragraph:
       ``(12) Ban on millionaires.--The mortgagor shall not have a 
     net worth, as of the date the mortgagor first applies for a 
     mortgage to be insured under the Program under this section, 
     that exceeds $1,000,000.'';
       (4) in subsection (h)(2)--
       (A) by striking ``The Board shall prohibit the Secretary 
     from paying'' and inserting ``The Secretary shall not pay''; 
     and
       (B) by inserting after the period at the end the following: 
     ``In implementing this provision with respect to a failure by 
     a mortgagor to make a first payment, the Secretary shall 
     establish policies and timing of endorsements as consistent 
     as is possible with endorsement policies established with 
     respect to mortgages insured under section 203(b)'';
       (5) in subsection (i)--
       (A) by inserting ``, after weighing maximization of 
     participation with consideration of collection of premiums,'' 
     after ``Secretary shall'';
       (B) in paragraph (1), by striking ``equal to 3 percent'' 
     and inserting ``not more than 2 percent''; and
       (C) in paragraph (2), by striking ``equal to 1.5 percent'' 
     and inserting ``not more than 1 percent'';
       (6) in subsection (k)--
       (A) by striking the subsection heading and inserting ``Exit 
     Fee'';
       (B) in paragraph (1), in the matter preceding subparagraph 
     (A), by striking ``such sale or refinancing'' and inserting 
     ``the mortgage being insured under this section''; and
       (C) in paragraph (2), by striking ``and the mortgagor'' and 
     all that follows through the end and inserting ``may, upon 
     any sale or disposition of the property to which the mortgage 
     relates, be entitled to up to 50 percent of appreciation, up 
     to the appraised value of the home at the time when the 
     mortgage being refinanced under this section was originally 
     made. The Secretary may share any amounts received under this 
     paragraph with the holder of the eligible mortgage refinanced 
     under this section.'';
       (7) in the heading for subsection (n), by striking ``the 
     Board'' and inserting ``Secretary'';
       (8) in subsection (p), by striking ``Under the direction of 
     the Board, the'' and inserting ``The'';
       (9) in subsection (s)--
       (A) in the first sentence of paragraph (2), by striking 
     ``Board of Directors of'' and inserting ``Advisory Board 
     for''; and
       (B) in paragraph (3)(A)(ii), by striking ``subsection 
     (e)(1)(B) and such other'' and inserting ``such'';
       (10) in subsection (v), by inserting after the period at 
     the end the following: ``The Secretary shall conform 
     documents, forms, and procedures for mortgages insured under 
     this section to those in place for mortgages insured under 
     section 203(b) to the maximum extent possible consistent with 
     the requirements of this section.''; and
       (11) by adding at the end the following new subsections:
       ``(x) Payment to Existing Loan Servicer.--The Secretary may 
     establish a payment to the servicer of the existing senior 
     mortgage for every loan insured under the HOPE for Homeowners 
     Program in an amount, for each such loan, that does not 
     exceed $1,000.
       ``(y) Auctions.--The Secretary, with the concurrence of the 
     Board, shall, if feasible, establish a structure and organize 
     procedures for an auction to refinance eligible mortgages on 
     a wholesale or bulk basis.''.
       (b) Reducing TARP Funds To Offset Costs of Program 
     Changes.--Paragraph (3) of section 115(a) of the Emergency 
     Economic Stabilization Act of 2008 (12 U.S.C. 5225) is 
     amended by inserting ``, as such amount is reduced by 
     $2,316,000,000,'' after ``$700,000,000,000''.

     SEC. 203. REQUIREMENTS FOR FHA-APPROVED MORTGAGEES.

       (a) Mortgagee Review Board.--Paragraph (2) of section 
     202(c) of the National Housing Act (12 U.S.C. 1708(c)) is 
     amended--
       (1) in subparagraph (E), by inserting ``and'' after the 
     semicolon;
       (2) in subparagraph (F), by striking ``; and'' and 
     inserting a period; and
       (3) by striking subparagraph (G).
       (b) Limitations on Participation and Mortgagee Approval and 
     Use of Name.--Section 202 of the National Housing Act (12 
     U.S.C. 1708) is amended--
       (1) by redesignating subsections (d), (e), and (f) as 
     subsections (e), (f), and (g), respectively;
       (2) by inserting after subsection (c) the following new 
     subsection:
       ``(d) Limitations on Participation in Origination and 
     Mortgagee Approval.--
       ``(1) Requirement.--Any person or entity that is not 
     approved by the Secretary to serve as a mortgagee, as such 
     term is defined in subsection (c)(7), shall not participate 
     in the origination of an FHA-insured loan except as 
     authorized by the Secretary.
       ``(2) Eligibility for approval.--In order to be eligible 
     for approval by the Secretary, an applicant mortgagee shall 
     not be, and shall not have any officer, partner, director, 
     principal, or employee of the applicant mortgagee who is--
       ``(A) currently suspended, debarred, under a limited denial 
     of participation (LDP), or otherwise restricted under part 24 
     or 25 of title 24 of the Code of Federal Regulations, or any 
     successor regulations to such parts, or under similar 
     provisions of any other Federal agency;
       ``(B) under indictment for, or has been convicted of, an 
     offense that reflects adversely upon the applicant's 
     integrity, competence or fitness to meet the responsibilities 
     of an approved mortgagee;
       ``(C) subject to unresolved findings contained in a 
     Department of Housing and Urban Development or other 
     governmental audit, investigation, or review;
       ``(D) engaged in business practices that do not conform to 
     generally accepted practices of prudent mortgagees or that 
     demonstrate irresponsibility;
       ``(E) convicted of, or who has pled guilty or nolo 
     contendre to, a felony related to participation in the real 
     estate or mortgage loan industry--
       ``(i) during the 7-year period preceding the date of the 
     application for licensing and registration; or
       ``(ii) at any time preceding such date of application, if 
     such felony involved an act of fraud, dishonesty, or a breach 
     of trust, or money laundering;
       ``(F) in violation of provisions of the S.A.F.E. Mortgage 
     Licensing Act of 2008 (12 U.S.C. 5101 et seq.) or any 
     applicable provision of State law; or
       ``(G) in violation of any other requirement as established 
     by the Secretary.''; and
       (3) by adding at the end the following new subsection:
       ``(h) Use of Name.--The Secretary shall, by regulation, 
     require each mortgagee approved by the Secretary for 
     participation in the FHA mortgage insurance programs of the 
     Secretary--
       ``(1) to use the business name of the mortgagee that is 
     registered with the Secretary in connection with such 
     approval in all advertisements and promotional materials, as 
     such terms are defined by the Secretary, relating to the 
     business of such mortgagee in such mortgage insurance 
     programs; and
       ``(2) to maintain copies of all such advertisements and 
     promotional materials, in such form and for such period as 
     the Secretary requires.''.
       (c) Change of Status.--The National Housing Act is amended 
     by striking section 532 (12 U.S.C. 1735f-10) and inserting 
     the following new section:

     ``SEC. 532. CHANGE OF MORTGAGEE STATUS.

       ``(a) Notification.--Upon the occurrence of any action 
     described in subsection (b), an approved mortgagee shall 
     immediately submit to the Secretary, in writing, notification 
     of such occurrence.
       ``(b) Actions.--The actions described in this subsection 
     are as follows:
       ``(1) The debarment, suspension of a Limited Denial of 
     Participation (LDP), or application of other sanctions, 
     fines, or penalties applied to the mortgagee or to any 
     officer, partner, director, principal, manager, supervisor, 
     loan processor, loan underwriter, or loan originator of the 
     mortgagee pursuant to applicable provisions of State or 
     Federal law.
       ``(2) The revocation of a State-issued mortgage loan 
     originator license issued pursuant to the S.A.F.E. Mortgage 
     Licensing Act of 2008 (12 U.S.C. 5101 et seq.) or any other 
     similar declaration of ineligibility pursuant to State 
     law.''.
       (d) Civil Money Penalties.--Section 536 of the National 
     Housing Act (12 U.S.C. 1735f-14) is amended--

[[Page H3001]]

       (1) in subsection (b)--
       (A) in paragraph (1)--
       (i) in the matter preceding subparagraph (A), by inserting 
     ``or any of its owners, officers, or directors'' after 
     ``mortgagee or lender'';
       (ii) in subparagraph (H), by striking ``title I'' and all 
     that follows through ``Act of 1989)'' and inserting ``title I 
     or II''; and
       (iii) by inserting after subparagraph (J) the following:
       ``(K) Violation of section 202(d) of this Act (12 U.S.C. 
     1708(d)).''; and
       (B) in paragraph (2)--
       (i) in subparagraph (B), by striking ``or'' at the end;
       (ii) in subparagraph (C), by striking the period at the end 
     and inserting ``; or''; and
       (iii) by adding at the end the following new subparagraph:
       ``(D) causing or participating in any of the violations set 
     forth in paragraph (1) of this subsection.''; and
       (2) in subsection (g), by striking ``The term'' and all 
     that follows through the end of the sentence and inserting 
     ``For purposes of this section, a person acts knowingly when 
     a person has actual knowledge of acts or should have known of 
     the acts.''.
       (e) Expanded Review of FHA Mortgagee Applicants and Newly 
     Approved Mortgagees.--Not later than the expiration of the 3-
     month period beginning upon the date of the enactment of this 
     Act, the Secretary of Housing and Urban Development shall--
       (1) expand the existing process for reviewing new 
     applicants for approval for participation in the mortgage 
     insurance programs of the Secretary for mortgages on 1- to 4-
     family residences for the purpose of identifying applicants 
     who represent a high risk to the Mutual Mortgage Insurance 
     Fund; and
       (2) implement procedures that, for mortgagees approved 
     during the 12-month period ending upon such date of 
     enactment--
       (A) expand the number of mortgages originated by such 
     mortgagees that are reviewed for compliance with applicable 
     laws, regulations, and policies; and
       (B) include a process for random reviews of such mortgagees 
     and a process for reviews that is based on volume of 
     mortgages originated by such mortgagees.

     SEC. 204. ENHANCEMENT OF LIQUIDITY AND STABILITY OF INSURED 
                   DEPOSITORY INSTITUTIONS TO ENSURE AVAILABILITY 
                   OF CREDIT AND REDUCTION OF FORECLOSURES.

       (a) Permanent Increase in Deposit Insurance.--
       (1) Amendments to federal deposit insurance act.--Effective 
     upon the date of the enactment of this Act, section 11(a) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1821(a)) is 
     amended--
       (A) in paragraph (1)(E), by striking ``$100,000'' and 
     inserting ``$250,000'';
       (B) in paragraph (1)(F)(i), by striking ``2010'' and 
     inserting ``2015'';
       (C) in subclause (I) of paragraph (1)(F)(i), by striking 
     ``$100,000'' and inserting ``$250,000'';
       (D) in subclause (II) of paragraph (1)(F)(i), by striking 
     ``the calendar year preceding the date this subparagraph 
     takes effect under the Federal Deposit Insurance Reform Act 
     of 2005'' and inserting ``calendar year 2008''; and
       (E) in paragraph (3)(A), by striking ``, except that 
     $250,000 shall be substituted for $100,000 wherever such term 
     appears in such paragraph''.
       (2) Amendment to federal credit union act.--Section 207(k) 
     of the Federal Credit Union Act (12 U.S.C. 1787(k)) is 
     amended--
       (A) in paragraph (3)--
       (i) by striking the opening quotation mark before 
     ``$250,000'';
       (ii) by striking ``, except that $250,000 shall be 
     substituted for $100,000 wherever such term appears in such 
     section''; and
       (iii) by striking the closing quotation mark after the 
     closing parenthesis; and
       (B) in paragraph (5), by striking ``$100,000'' and 
     inserting ``$250,000''.
       (3) Repeal of eesa provision.--Section 136 of the Emergency 
     Economic Stabilization Act (12 U.S.C. 5241) is hereby 
     repealed.
       (b) Extension of Restoration Plan Period.--Section 
     7(b)(3)(E)(ii) of the Federal Deposit Insurance Act (12 
     U.S.C. 1817(b)(3)(E)(ii)) is amended by striking ``5-year 
     period'' and inserting ``8-year period''.
       (c) FDIC and NCUA Borrowing Authority.--
       (1) FDIC.--Section 14(a) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1824(a)) is amended by striking 
     ``$30,000,000,000'' and inserting ``$100,000,000,000''.
       (2) NCUA.--Section 203(d)(1) of the Federal Credit Union 
     Act (12 U.S.C. 1783(d)(1)) is amended by striking 
     ``$100,000,000'' and inserting ``$6,000,000,000''.
       (d) Expanding Systemic Risk Special Assessments.--Section 
     13(c)(4)(G)(ii) of the Federal Deposit Insurance Act (12 
     U.S.C. 1823(c)(4)(G)(ii)) is amended to read as follows:
       ``(ii) Repayment of loss.--

       ``(I) In general.--The Corporation shall recover the loss 
     to the Deposit Insurance Fund arising from any action taken 
     or assistance provided with respect to an insured depository 
     institution under clause (i) from 1 or more special 
     assessments on insured depository institutions, depository 
     institution holding companies (with the concurrence of the 
     Secretary of the Treasury with respect to holding companies), 
     or both, as the Corporation determines to be appropriate.
       ``(II) Treatment of depository institution holding 
     companies.--For purposes of this clause, sections 7(c)(2) and 
     18(h) shall apply to depository institution holding companies 
     as if they were insured depository institutions.
       ``(III) Regulations.--The Corporation shall prescribe such 
     regulations as it deems necessary to implement this clause. 
     In prescribing such regulations, defining terms, and setting 
     the appropriate assessment rate or rates, the Corporation 
     shall establish rates sufficient to cover the losses incurred 
     as a result of the actions of the Corporation under clause 
     (i) and shall consider: the types of entities that benefit 
     from any action taken or assistance provided under this 
     subparagraph; economic conditions, the effects on the 
     industry, and such other factors as the Corporation deems 
     appropriate and relevant to the action taken or the 
     assistance provided. Any funds so collected that exceed 
     actual losses shall be placed in the Deposit Insurance 
     Fund.''.

       (e) Establishment of a National Credit Union Share 
     Insurance Fund Restoration Plan Period.--Section 202(c)(2) of 
     the Federal Credit Union Act (12 U.S.C. 1782(c)(2)) is 
     amended by adding at the end the following new subparagraph:
       ``(D) Fund restoration plans.--
       ``(i) In general.--Whenever--

       ``(I) the Board projects that the equity ratio of the Fund 
     will, within 6 months of such determination, fall below the 
     minimum amount specified in subparagraph (C) for the 
     designated equity ratio; or
       ``(II) the equity ratio of the Fund actually falls below 
     the minimum amount specified in subparagraph (C) for the 
     equity ratio without any determination under sub-clause (I) 
     having been made,

     the Board shall establish and implement a Share Insurance 
     Fund restoration plan within 90 days that meets the 
     requirements of clause (ii) and such other conditions as the 
     Board determines to be appropriate.
       ``(ii) Requirements of restoration plan.--A Share Insurance 
     Fund restoration plan meets the requirements of this clause 
     if the plan provides that the equity ratio of the Fund will 
     meet or exceed the minimum amount specified in subparagraph 
     (C) for the designated equity ratio before the end of the 5-
     year period beginning upon the implementation of the plan (or 
     such longer period as the Board may determine to be necessary 
     due to extraordinary circumstances).
       ``(iii) Transparency.--Not more than 30 days after the 
     Board establishes and implements a restoration plan under 
     clause (i), the Board shall publish in the Federal Register a 
     detailed analysis of the factors considered and the basis for 
     the actions taken with regard to the plan.''.

  The Acting CHAIR. No amendment to the bill is in order except those 
printed in House Report 111-21. Each amendment may be offered only in 
the order printed in the report, by a Member designated in the report, 
shall be considered read, shall be debatable for the time specified in 
the report, equally divided and controlled by the proponent and an 
opponent of the amendment, shall not be subject to amendment, and shall 
not be subject to a demand for division of the question.


 Amendment No. 1 Offered by Ms. Zoe Lofgren of California, as Modified

  The Acting CHAIR. It is now in order to consider amendment No. 1 
printed in House Report 111-21, as perfected by the modification 
printed in House Report 111-23.
  Ms. ZOE LOFGREN of California. I have this amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 1 offered by Ms. Zoe Lofgren of California, 
     as modified:
       In the table of contents of the bill, in the item relating 
     to section 121, strike ``department of veterans affairs'' and 
     insert ``Department of Veterans Affairs''.
       Page 2, after line 6, insert the following (and make such 
     technical and conforming changes as may be appropriate):

     SEC. 100. 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

[[Page H3002]]

     agreement notwithstanding the filing of a case under this 
     title, as if such case had not been filed.''.
       Beginning on page 7, strike line 6 and all that follows 
     through line 16 on page 8, and insert the following:
       ``(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 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.''.
       Beginning on page 8, strike line 17 and all that follows 
     through line 7 on page 9, and insert the following (and make 
     such technical and conforming changes as may be appropriate):
       ``(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;''.
       Page 9, line 24, insert ``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'' after ``determined''.
       Page 11, strike lines 23 through 25, insert the following 
     (and make such technical and conforming changes as may be 
     appropriate):
       (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 1st place it appears,
       Page 12, line 20, insert the following after ``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 
     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.)''.
       Page 12, after line 24, insert the following (and make such 
     technical and conforming changes as may be appropriate):
       (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.''.
       Page 15, after line 8, insert the following (and make such 
     technical and conforming changes as may be appropriate):

     SEC. 109. 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. 110. 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.
       Page 15, line 15, strike ``Subsection (a) of section'' and 
     insert ``Section''.
       Page 25, after line 9, insert the following (and make such 
     technical and conforming changes as may be appropriate):

     SEC. 125. MORTGAGE MODIFICATION DATA COLLECTING AND 
                   REPORTING.

       (a) Reporting Requirements.--Not later than 120 days after 
     the date of the enactment of this Act, and quarterly 
     thereafter, the Comptroller of the Currency, in coordination 
     with the Director of the Office of Thrift Supervision, shall 
     submit a report to the Committee on Banking, Housing, and 
     Urban Affairs of the Senate, the Committee on Financial 
     Services of the House of Representatives, and the Joint 
     Economic Committee on the volume of mortgage modifications 
     reported to the Office of the Comptroller of the Currency and 
     the Office of Thrift Supervision, under the mortgage metrics 
     program of each such Office, during the previous quarter, 
     including the following:
       (1) A copy of the data collection instrument currently used 
     by the Office of the Comptroller of the Currency and the 
     Office of Thrift Supervision to collect data on loan 
     modifications.
       (2) The total number of mortgage modifications resulting in 
     each of the following:
       (A) Additions of delinquent payments and fees to loan 
     balances.
       (B) Interest rate reductions and freezes.
       (C) Term extensions.
       (D) Reductions of principal.
       (E) Deferrals of principal.
       (F) Combinations of modifications described in subparagraph 
     (A), (B), (C), (D), or (E).
       (3) The total number of mortgage modifications in which the 
     total monthly principal and interest payment resulted in the 
     following:

[[Page H3003]]

       (A) An increase.
       (B) Remained the same.
       (C) Decreased less than 10 percent.
       (D) Decreased between 10 percent and 20 percent.
       (E) Decreased 20 percent or more.
       (4) The total number of loans that have been modified and 
     then entered into default, where the loan modification 
     resulted in--
       (A) higher monthly payments by the homeowner;
       (B) equivalent monthly payments by the homeowner;
       (C) lower monthly payments by the homeowner of up to 10 
     percent;
       (D) lower monthly payments by the homeowner of between 10 
     percent to 20 percent; or
       (E) lower monthly payments by the homeowner of more than 20 
     percent.
       (b) Data Collection.--
       (1) Required.--
       (A) In general.--Not later than 60 days after the date of 
     the enactment of this Act, the Comptroller of the Currency 
     and the Director of the Office of Thrift Supervision, shall 
     issue mortgage modification data collection and reporting 
     requirements to institutions covered under the reporting 
     requirement of the mortgage metrics program of the 
     Comptroller or the Director.
       (B) Inclusiveness of collections.--The requirements under 
     subparagraph (A) shall provide for the collection of all 
     mortgage modification data needed by the Comptroller of the 
     Currency and the Director of the Office of Thrift Supervision 
     to fulfill the reporting requirements under subsection (a).
       (2) Report.--The Comptroller of the Currency shall report 
     all requirements established under paragraph (1) to each 
     committee receiving the report required under subsection (a).
       Page 25, line 24, after ``disposition'' insert the 
     following: ``, including any modification or refinancing 
     undertaken pursuant to standard loan modification, sale, or 
     disposition guidelines issued by the Secretary of the 
     Treasury or his designee under the Emergency Economic 
     Stabilization Act of 2008,''.
       Page 28, strike lines 18 and 19 and insert the following:
       (c) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       (1) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury.
       (2) Securitization vehicle.--The term ``securitization 
     vehi-
       Page 28, strike line 22 and insert the following:
       (A) is the issuer, or is created by the issuer, of
       Page 29, strike line 3 and insert the following:
       (B) holds such mortgages.
       Page 30, line 12, before the period insert the following: 
     ``and has not been convicted under Federal or State law for 
     fraud during the 10-year period ending upon the insurance of 
     the mortgage under this section''.
       Page 30, after line 23, insert the following:
       (B) in paragraph (4)(A), by striking ``; subject to 
     standards established by the Board under subparagraph (B),'';
       Page 31, line 1, strike lines 1 through 3 and insert the 
     following:
       (C) in paragraph (7), by striking ``and provided that'' and 
     all that follows through ``new second lien'' and inserting 
     ``and except that the Secretary may, under such terms and 
     conditions as the Secretary may establish, permit the 
     establishment of a second lien on a property under an 
     eligible mortgage to be insured, for the purpose of 
     facilitating payment of closing or refinancing costs by a 
     State or locality using funds provided under the HOME 
     Investment Partnerships program under title II of the 
     Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
     12721 et seq.) or the community development block grants 
     program under title I of the Housing and Community 
     Development Act of 1974 (42 U.S.C. 5301 et seq.) or by a 
     State or local housing finance agency'';
       Page 31, line 4, strike ``(C)'' and insert ``(D)''.
       Page 31, line 15, strike ``and''.
       Page 31, after line 15, insert the following:
       (E) by striking subparagraph (10);
       (F) in paragraph (11), by inserting before the period at 
     the end the following: ``, except that the Secretary may 
     provide exceptions to such latter requirement (relating to 
     present ownership interest) for any mortgagor who has 
     inherited a property or for any mortgagor who has relocated 
     to a new jurisdiction, and is in the process of trying to 
     sell such property or has been unable to sell such property 
     due to adverse market conditions'';
       (G) by redesignating paragraph (11) as paragraph (10); and
       Page 31, line 16, strike ``(D) by adding after paragraph 
     (11)'' and insert ``(H) by adding at the end''.
       Page 31, line 18, strike ``(12)'' and insert ``(11)''.
       Page 36, line 6, strike ``or employee'' and insert 
     ``manager, supervisor, loan processor, loan underwriter, or 
     loan originator''.
       Page 37, strike the quotation marks in line 19 and all that 
     follows through the end of the line.
       Page 37, after line 19, insert the following:
       ``(3) Rulemaking and implementation.--The Secretary shall 
     conduct a rulemaking to carry out this subsection. The 
     Secretary shall implement this subsection not later than the 
     expiration of the 60-day period beginning upon the date of 
     the enactment of this subsection by notice, mortgagee letter, 
     or interim final regulations, which shall take effect upon 
     issuance.''; and
       Page 47, after line 13, insert the following (and make such 
     technical and conforming changes as may be appropriate):

     SEC. 205. APPLICATION OF GSE CONFORMING LOAN LIMIT TO 
                   MORTGAGES ASSISTED WITH TARP FUNDS.

       In making any assistance available to prevent and mitigate 
     foreclosures on residential properties, including any 
     assistance for mortgage modifications, using any amounts made 
     available to the Secretary of the Treasury under title I of 
     the Emergency Economic Stabilization Act of 2008, the 
     Secretary shall provide that the limitation on the maximum 
     original principal obligation of a mortgage that may be 
     modified, refinanced, made, guaranteed, insured, or otherwise 
     assisted, using such amounts shall not be less than the 
     dollar amount limitation on the maximum original principal 
     obligation of a mortgage that may be purchased by the Federal 
     Home Loan Mortgage Corporation that is in effect, at the time 
     that the mortgage is modified, refinanced, made, guaranteed, 
     insured, or otherwise assisted using such amounts, for the 
     area in which the property involved in the transaction is 
     located.

     SEC. 206. MORTGAGES ON CERTAIN HOMES ON LEASED LAND.

       Section 255(b)(4) of the National Housing Act (12 U.S.C. 
     1715z-20(b)(4)) is amended by striking subparagraph (B) and 
     inserting:
       ``(B) under a lease that has a term that ends no earlier 
     than the minimum number of years, as specified by the 
     Secretary, beyond the actuarial life expectancy of the 
     mortgagor or comortgagor, whichever is the later date.''.

     SEC. 207. SENSE OF CONGRESS REGARDING MORTGAGE REVENUE BOND 
                   PURCHASES.

       It is the sense of the Congress that the Secretary of the 
     Treasury should use amounts made available in this Act to 
     purchase mortgage revenue bonds for single-family housing 
     issued through State housing finance agencies and through 
     units of local government and agencies thereof.
       Page 47, at the end of title II, add the following (and 
     conform the table of contents accordingly):

                       TITLE III--MORTGAGE FRAUD

     SEC. 301. SHORT TITLE.

       This title may be cited as the ``Nationwide Mortgage Fraud 
     Task Force Act of 2009''.

     SEC. 302. NATIONWIDE MORTGAGE FRAUD TASK FORCE.

       (a) Establishment.--There is established in the Department 
     of Justice the Nationwide Mortgage Fraud Task Force 
     (hereinafter referred to in this section as the ``Task 
     Force'') to address mortgage fraud in the United States.
       (b) Support.--The Attorney General shall provide the Task 
     Force with the appropriate staff, administrative support, and 
     other resources necessary to carry out the duties of the Task 
     Force.
       (c) Executive Director.--The Attorney General shall appoint 
     one staff member provided to the Task Force to be the 
     Executive Director of the Task Force and such Executive 
     Director shall ensure that the duties of the Task Force are 
     carried out.
       (d) Branches.--The Task Force shall establish, oversee, and 
     direct branches in each of the 10 States determined by the 
     Attorney General to have the highest concentration of 
     mortgage fraud.
       (e) Mandatory Functions.--The Task Force, including the 
     branches of the Task Force established under subsection (d), 
     shall--
       (1) establish coordinating entities, and solicit the 
     voluntary participation of Federal, State, and local law 
     enforcement and prosecutorial agencies in such entities, to 
     organize initiatives to address mortgage fraud, including 
     initiatives to enforce State mortgage fraud laws and other 
     related Federal and State laws;
       (2) provide training to Federal, State, and local law 
     enforcement and prosecutorial agencies with respect to 
     mortgage fraud, including related Federal and State laws;
       (3) collect and disseminate data with respect to mortgage 
     fraud, including Federal, State, and local data relating to 
     mortgage fraud investigations and prosecutions; and
       (4) perform other functions determined by the Attorney 
     General to enhance the detection of, prevention of, and 
     response to mortgage fraud in the United States.
       (f) Optional Functions.--The Task Force, including the 
     branches of the Task Force established under subsection (d), 
     may--
       (1) initiate and coordinate Federal mortgage fraud 
     investigations and, through the coordinating entities 
     established under subsection (e), State and local mortgage 
     fraud investigations;
       (2) establish a toll-free hotline for--
       (A) reporting mortgage fraud;
       (B) providing the public with access to information and 
     resources with respect to mortgage fraud; and
       (C) directing reports of mortgage fraud to the appropriate 
     Federal, State, and local law enforcement and prosecutorial 
     agency, including to the appropriate branch of the Task Force 
     established under subsection (d);
       (3) create a database with respect to suspensions and 
     revocations of mortgage industry licenses and certifications 
     to facilitate the sharing of such information by States;
       (4) make recommendations with respect to the need for and 
     resources available to provide the equipment and training 
     necessary for the Task Force to combat mortgage fraud; and

[[Page H3004]]

       (5) propose legislation to Federal, State, and local 
     legislative bodies with respect to the elimination and 
     prevention of mortgage fraud, including measures to address 
     mortgage loan procedures and property appraiser practices 
     that provide opportunities for mortgage fraud.
       (g) Definition.--In this section, the term ``mortgage 
     fraud'' means a material misstatement, misrepresentation, or 
     omission relating to the property or potential mortgage 
     relied on by an underwriter or lender to fund, purchase, or 
     insure a loan.
       Page 47, at the end of the bill, add the following (and 
     conform the table of contents accordingly):

              TITLE IV--FORECLOSURE MORATORIUM PROVISIONS

     SEC. 401. SENSE OF THE CONGRESS ON FORECLOSURES.

       (a) In General.--It is the sense of the Congress that 
     mortgage holders, institutions, and mortgage servicers should 
     not initiate a foreclosure proceeding or a foreclosure sale 
     on any homeowner until the foreclosure mitigation provisions, 
     like the Hope for Homeowners program, as required under title 
     II, and the President's ``Homeowner Affordability and 
     Stability Plan'' have been implemented and determined to be 
     operational by the Secretary of Housing and Urban Development 
     and the Secretary of the Treasury.
       (b) Scope of Moratorium.--The foreclosure moratorium 
     referred to in subsection (a) should apply only for first 
     mortgages secured by the owner's principal dwelling.
       (c) FHA-Regulated Loan Modification Agreements.--If a 
     mortgage holder, institution, or mortgage servicer to which 
     subsection (a) applies reaches a loan modification agreement 
     with a homeowner under the auspices of the Federal Housing 
     Administration before any plan referred to in such subsection 
     takes effect, subsection (a) shall cease to apply to such 
     institution as of the effective date of the loan modification 
     agreement.
       (d) Duty of Consumer to Maintain Property.--Any homeowner 
     for whose benefit any foreclosure proceeding or sale is 
     barred under subsection (a) from being instituted, continued 
     , or consummated with respect to any homeowner mortgage 
     should not, with respect to any property securing such 
     mortgage, destroy, damage, or impair such property, allow the 
     property to deteriorate, or commit waste on the property.
       (e) Duty of Consumer to Respond to Reasonable Inquiries.--
     Any homeowner for whose benefit any foreclosure proceeding or 
     sale is barred under subsection (a) from being instituted, 
     continued, or consummated with respect to any homeowner 
     mortgage should respond to reasonable inquiries from a 
     creditor or servicer during the period during which such 
     foreclosure proceeding or sale is barred.

  The Acting CHAIR. Pursuant to House Resolution 190, the gentlewoman 
from California (Ms. Zoe Lofgren) and a Member opposed each will 
control 15 minutes.
  The Chair recognizes the gentlewoman from California.
  Ms. ZOE LOFGREN of California. Mr. Chairman, I yield myself such time 
as I may consume.
  (Ms. ZOE LOFGREN of California asked and was given permission to 
revise and extend her remarks.)
  Ms. ZOE LOFGREN of California. Mr. Chairman, this important bill 
gives families whose home mortgages are in distress a better 
opportunity to come to terms with their lender, to bring their mortgage 
payments in line with prevailing lending rates in the lending market 
and with prevailing values in the housing market. This is the same 
opportunity that owners of vacation homes, investment properties, 
private jets, and luxury yachts have long enjoyed. I think it's only 
fair that we offer it now to average families as well. The economic 
crisis engulfing this country and the world had its start in the 
housing foreclosure crisis. The Helping Families Save Their Homes Act 
will begin to address this underlying cause, and it will provide 
meaningful relief to struggling homeowners.
  In developing this legislation, we have benefited at every step of 
the way from constructive engagement from members on and off the 
Judiciary Committee, from lenders and brokers, from consumer groups, 
from bankruptcy judges and trustees. With their help, we've reached 
consensus on a series of significant changes culminating in the 
manager's amendment before us today. I should note that the amendment 
is the Lofgren-Tauscher-Cardoza amendment, and the changes that it 
encompasses make this a much better bill.
  Under the manager's amendment, the homeowner must notify the lender, 
submit financial records and work in good faith for at least 30 days to 
try to modify a mortgage outside of the bankruptcy using the Obama 
mortgage modification plan outlined yesterday. We provide also that, 
should those efforts not prove fruitful and as a last resort an 
individual ends up in Chapter 13 proceedings, the court should utilize 
the Obama mortgage modification plan as a guideline for the court in 
reviewing and in helping a homeowner to meet obligations.
  We also have required that bankruptcy courts will use the FHA 
appraisal guidelines, repayment plans, and for equal monthly mortgage 
payments. If a homeowner sells a home while still under a Chapter 13 
payment plan, the lender is going to share in the profit, and that's 
only fair. The closer in time of the mortgage modification, the greater 
the lender's share, and the manager's amendment actually further 
increases the lender's share at each point over the period.
  Homeowners who engage in bad faith, such as filing for bankruptcy 
when they could really afford to pay their mortgages, will be 
disqualified for assistance in chapter 13, and a special Justice 
Department task force is set up to investigate reports of possible 
mortgage fraud. These are in addition to improvements already made at 
earlier stages. The changes are all described in greater detail in a 
summary that was sent to all of your offices today. I have brought 
copies of a summary with me today.
  In short, we have sought to respond in a reasonable manner to every 
single concern brought to our attention. We've achieved a balanced 
reform that will bring meaningful help to families in genuine need 
without costing taxpayers a dime.
  The bill is not going to usher in a rash of bankruptcy filings. In 
fact, by setting up a homeowner-lender negotiating process that begins 
well before bankruptcy, it is designed to keep more families out of 
bankruptcy and out of foreclosure. The number of new chapter 13 
mortgage modifications that may result will be far less than the number 
of foreclosures that will be prevented, and preventing foreclosures is 
the key. That will benefit not only homeowners and their families but 
also neighborhoods, their communities, their lenders, and the entire 
American economy.
  It's worth noting that any time there is a foreclosure, the average 
decline of property values for neighboring property is 9 percent, so 
this is important to every American to avert these foreclosures.
  I thank Mrs. Tauscher, Mr. Cardoza, Mr. Marshall, Brad Miller, John 
Conyers, and all of the other Members who have worked so hard to 
improve this bill through the manager's amendment.
  I reserve the balance of my time.
  Mr. SMITH of Texas. Mr. Chairman, I rise in opposition to the 
amendment, and I will yield myself such time as I may consume.
  Unfortunately, this amendment does little to change the fact that the 
bankruptcy provisions in this legislation will fail to solve the 
foreclosure crisis. Some claim the manager's amendment will narrow the 
bill's bankruptcy provisions, but there is nothing in this amendment 
that meaningfully changes the underlying bill. Meaningful change would 
have meant a true requirement for bankruptcy petitioners to exhaust 
other options before going to bankruptcy court.
  As Speaker Pelosi observed just this week, ``Bankruptcy, by its 
nature, should require a judge to see that other remedies had been 
exhausted and that good faith overtures from the lender had not been 
dismissed by the borrower.''
  The manager's amendment does not do that. Rather, it merely requires 
that judges consider whether the lender offered the borrower a loan 
modification when determining whether to approve the borrower's 
bankruptcy plan. So a judge is free to consider a loan modification the 
lender offered and then approve a cramdown despite the lender's offer. 
The judge can approve a cramdown even if the borrower signed a pre-
bankruptcy modification with the lender and then went shopping for a 
sweeter deal in bankruptcy.
  The manager's amendment also contains a major loophole that will 
allow borrowers to avoid any requirement that they contact their lender 
about a loan modification prior to filing for bankruptcy. Under the 
manager's amendment, a borrower can do nothing, fail to seek a 
qualifying loan modification and still be entitled to get a

[[Page H3005]]

bankruptcy cramdown once a foreclosure sale was scheduled. In other 
words, bankruptcy relief is available to those who fail to seek a loan 
modification under the Obama plan.
  Meaningful change also would have meant substantially narrowing the 
class of loans eligible for bankruptcy modification. Senator Durbin, 
the principal sponsor of the companion legislation in the Senate, has 
acknowledged the merit and proposals to limit the bill to subprime 
loans.

                 [From American Banker, Feb. 27, 2009]

                  Transcript of Remarks by Sen. Durbin

       The following is a transcript of remarks between Sen. 
     Richard Durbin and an American Banker reporter, Tuesday 
     evening after President Obama's speech to Congress.
       AB Reporter: ``Sen. Durbin, do you have a moment today on 
     bankruptcy reform?''
       Sen. Durbin: ``Sure.''
       AB Reporter: ``I know that in the House, at least regarding 
     this week, the lenders are still trying to make the 
     restrictions so that you have to exhaust all other recourses 
     before bankruptcy pretty tough, even today I heard about 
     making HUD or one of the regulators certify that you had a 
     modification or something that didn't work before you could 
     go through bankruptcy. What are your thoughts on what the 
     standard ought to be?''
       Sen. Durbin: ``I think that it is reasonable to require the 
     borrower to be in communication for a reasonable time before 
     they file for bankruptcy. You know if a borrower will not 
     talk to a bank they should not be able to avail themselves 
     but it's really difficult to write into law a measurement of 
     good faith so the best you can do is give them an opportunity 
     to meet. Remember 99% of foreclosed homes end up owned by the 
     bank so it isn't as if they are going to end up coming out 
     ahead if the person's losing their home. They get stuck with 
     $50,000 in costs and a house to maintain; to protect from 
     vandalism, and to show and try to sell, so the banks ought to 
     be much more forthcoming. Every attempt we've tried, every 
     voluntary attempt we've tried has failed. You have to have 
     this bankruptcy provision as the last resort if there is a 
     failure to negotiate the mortgage.''
       AB Reporter: ``Do you know when the Senate might be taking 
     this up?''
       Sen. Durbin: ``After the House and we might change it of 
     course. There are variations we're looking at. But I'm 
     willing to restrict this to homeowners to eliminate 
     speculators; to subprime mortgages, only those currently in 
     existence. I want to make this a reasonable limited--
       AB Reporter: ``You're willing to limit it to subprime 
     mortgages?''
       Sen. Durbin: ``We've talked about that as a possibility. 
     But I am willing to negotiate. I want this to be a reasonable 
     approach, but we have to include it. If we don't include it 
     we'll be stuck in the same mess we're in today.''
       AB Reporter: ``What about the time limitation as far as 
     when the loans were originated. I understand there are some 
     who would like to see it limited to loan underwritten in the 
     last few years?''
       Sen. Durbin: ``My version will not be prospective. So it 
     has to be existing loans.''

  Mr. Chairman, the manager's amendment makes no attempt to narrow the 
class of eligible loans. That class is as wide as it ever was. Finally, 
rather than narrowing the bill, the manager's amendment actually 
provides that, if the judge doesn't want to give a cramdown, he can 
just rewrite the mortgage as a no-interest loan over the full term of a 
new 30-year mortgage. What a gift and what an insult to those who pay 
their mortgages on time. The only borrower the manager's amendment 
suggests should be denied relief is the borrower who ``can pay all of 
his or her debts and any future payment increases on such debts without 
difficulty for the foreseeable future,'' but that person will never 
need to be in bankruptcy court, by definition.
  Mr. Chairman, the manager's amendment continues the majority's policy 
of punishing the successful, taxing the responsible and holding no one 
accountable. It is unfair for Congress to bail out mortgage lenders and 
borrowers on the backs of responsible homeowners who continue to pay 
their mortgages even in these troubled economic times. Clearly, the 
American people are not willing to pay for their neighbors' 
irresponsible actions. The manager's amendment hardly narrows the scope 
of the underlying bill. In some areas, it actually makes it worse. 
Members should oppose both this amendment and the underlying bill.
  Mr. Chairman, I reserve the balance of my time.
  Ms. ZOE LOFGREN of California. Mr. Chairman, I would now like to 
yield 1 minute to the gentleman from Vermont (Mr. Welch).
  Mr. WELCH. Mr. Chairman, it is important to understand that Citigroup 
supports this bill. Why? They're a huge lender. It's because they 
understand that we have to stabilize home values in order to begin the 
recovery, and they need a tool to accomplish it.
  So this is about lenders as much as it is about borrowers. Why? 
Because these mortgages that have been sliced and diced into 40 or 50 
different sections make it impossible even for a mortgage company and a 
borrower, homeowner or a family to come together to resolve the problem 
that they share together. So this bankruptcy provision, written 
narrowly so that it is a last resort, is not only fair, but is 
necessary to lenders as well as to borrowers.
  I applaud both committees for the work that they have done.
  The Acting CHAIR. Without objection, the gentleman from Virginia (Mr. 
Goodlatte) will control the remainder of the time of the gentleman from 
Texas (Mr. Smith).
  There was no objection.
  Mr. GOODLATTE. Mr. Chairman, at this time, I am pleased to yield 1 
minute to the gentlewoman from Minnesota (Mrs. Bachmann).
  Mrs. BACHMANN. Mr. Chairman, of the foundational policies of American 
exceptionalism, the concepts that have inspired our great Nation are 
the sanctity of private contracts and upholding the rule of law. This 
cramdown bill crassly undercuts both of these pillars of American 
exceptionalism.
  Why would a lender make a 30-year loan if they fear the powers of the 
Federal Government will violate the very terms of that loan? They will 
only make those loans at a great cost both to the borrower and to our 
society. Surely as day follows night, we will witness yet another nail 
in the coffin of home developers who already are reeling under the 
burden of poisonous government policies.
  Experts currently estimate that the additional cost due to this risk 
of the cramdown bill would raise mortgage rates as much as two full 
percentage points or would substantially increase required down 
payments. This is the last thing homeowners need, the last thing our 
economy needs. There are responsible homeowners all across America who 
are living within their means, who are making honest representations on 
their loan applications, who are paying their debts, and who are 
working hard to achieve the American dream. Let's not disadvantage 
them.
  Ms. ZOE LOFGREN of California. I would just note that yesterday was 
the anniversary of our Constitution's going into effect, March 4, 1789. 
In that Constitution was article I, section 8 that provides for 
bankruptcy.
  I would yield 40 seconds to Mr. Marshall.
  Mr. MARSHALL. Mr. Chairman, there are a number of misconceptions 
about this bill because it only affects existing mortgages, not home 
loans in the future. It will have no impact on the cost of borrowing 
into the future. For all of those homeowners like me who haven't been 
part of this latest credit crisis, I see my property values declining 
dramatically, in part, because there are foreclosures and vacancies 
occurring all over the country.
  In essence, what this bill would do is force the parties--the lender 
and the borrower--without putting any taxpayer dollars in it, to deal 
with their circumstances without adding more properties vacant on the 
market, declining home prices that are affecting all Americans. It's 
good for lenders. It's good for homeowners. It does not pose a risk of 
an increased cost of credit.

                              {time}  1230

  Ms. ZOE LOFGREN of California. Mr. Chairman, I would further yield 1 
minute to a member of the committee, Ms. Sheila Jackson-Lee of Texas.
  (Ms. JACKSON-LEE of Texas asked and was given permission to revise 
and extend her remarks.)
  Ms. JACKSON-LEE of Texas. Mr. Chairman, I thank the manager for all 
of her hard work.
  I want to pay tribute to Chairman Conyers for standing up in early 
January and insisting that we complete our tasks, and I always come to 
the floor to say, this is the little guy's day.
  I came earlier today to speak of an individual who had foreclosure 
issues, but as I proceeded to read her case, she actually went into 
loan modification with her mortgager, her lender, Countrywide. And 
isn't it interesting that as her fees were paid and the loan was

[[Page H3006]]

supposed to be modified, that some days later, here comes the mortgager 
with the foreclosure notice or a foreclosure person at her door taking 
pictures trying to decide what the situation was. Interestingly enough, 
the house had gone into sale.
  These are the unscrupulous types of activities that have come about 
when there is no binding, if you will, judgment that can come about 
through the bankruptcy court.
  Again, this bill forces no one to pay anything. It takes no money out 
of the government. All it does is it allows us to treat those fairly 
who are going into foreclosure.
  Mr. Chairman, I rise in strong support of H.R. 1106, ``Helping 
Families Save Their Homes in Bankruptcy Act of 2009.'' I would like to 
thank Chairman Conyers of the House Judiciary Committee and Chairman 
Barney Frank of the Financial Services Committee for their leadership 
on this issue. I also would like to thank Arthur D. Sidney of my staff 
who serves as my able Legislative Director.
  Mr. Chairman, I urge my colleagues to support this bill because it 
provides a viable medium for bankruptcy judges to modify the terms of 
mortgages held by homeowners who have little recourse but to declare 
bankruptcy.
  This bill could not have come at a more timely moment. This bill is 
on the floor of the House within weeks after the President's address 
before the Joint Session of Congress where President Obama outlined his 
economic plan for America and discussed the current economic situation 
that this country is facing.
  To be sure, there are many economic woes that saddle this country. 
The statistics are staggering.
  Home foreclosures are at an all-time high and they will increase as 
the recession continues. In 2006, there were 1.2 million foreclosures 
in the United States, representing an increase of 42 percent over the 
prior year. During 2007 through 2008, mortgage foreclosures were 
estimated to result in a whopping $400 billion worth of defaults and 
$100 billion in losses to investors in mortgage securities. This means 
that one per 62 American households is currently approaching levels not 
seen since the Depression.
  The current economic crisis and the foreclosure blight have affected 
new home sales and depressed home value generally. New home sales have 
fallen by about 50 percent. One in six homeowners owes more on a 
mortgage than the home is worth which raises the possibility of 
default. Home values have fallen nationwide from an average of 19% from 
their peak in 2006, and this price plunge has wiped out trillions of 
dollars in home equity. The tide of foreclosure might become self-
perpetuating. The nation could be facing a housing depression--
something far worse than a recession.
  Obviously, there are substantial societal and economic costs of home 
foreclosures that adversely impact American families, their 
neighborhoods, communities and municipalities. A single foreclosure 
could impose direct costs on local government agencies totaling more 
than $34,000.
  I am glad that this legislation is finally on the floor of the United 
States House of Representatives. I have long championed in the first 
TARP bill that was introduced and signed late last Congress, that 
language be included to specifically address the issue of mortgage 
foreclosures. I had asked that $100 billion be set aside to address 
that issue. Now, my idea has been vindicated as the TARP today has 
included language and we here today are continuing to engage in the 
dialogue to provide monies to those in mortgage foreclosure. I have 
also asked for modification of homeowners' existing loans to avoid 
mortgage foreclosure. I believe that the rules governing these loans 
should be relaxed. These are indeed tough economic times that require 
tough measures.
  Because of the pervasive home foreclosures, federal legislation is 
necessary to curb the fallout from the subprime mortgage crisis. For 
consumers facing a foreclosure sale who want to retain their homes, 
Chapter 13 of the Bankruptcy Code provides some modicum of protection. 
The Supreme Court has held that the exception to a Chapter 13's ability 
to modify the rights of creditors applies even if the mortgage is 
under-secured. Thus, if a Chapter 13 debtor owes $300,000 on a mortgage 
for a home that is worth less than $200,000, he or she must repay the 
entire amount in order to keep his or her home, even though the maximum 
that the mortgage would receive upon foreclosure is the home's value, 
i.e., $200,000, less the costs of foreclosure.

  Importantly, H.R. 1106 provides for a relaxation of the bankruptcy 
provisions and waives the mandatory requirement that a debtor must 
receive credit counseling prior to the filing for bankruptcy relief, 
under certain circumstances. The waiver applies in a Chapter 13 case 
where the debtor 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 proceeding against such 
residence.
  This bill also prohibits claims arising from violations of consumer 
protection laws. Specifically, this bill amends the Bankruptcy Code to 
disallow a claim that is subject to any remedy for damages or 
rescission as a result of the claimant's failure to comply with any 
applicable requirement under the Truth in Lending Act or other 
applicable state or federal consumer protection law in effect when the 
noncompliance took place, notwithstanding the prior entry of a 
foreclosure judgment.
  H.R. 1106 also amends the Bankruptcy Code to permit modification of 
certain mortgages that are secured by the debtor's principal residence 
in specified respects. Lastly, the bill provides that the debtor, the 
debtor's property, and property of the bankruptcy estate are not liable 
for a fee, cost, or charge incurred while the Chapter 13 case is 
pending and that arises from a debt secured by the debtor's principal 
residence, unless the holder of the claim complies with certain 
requirements.
  I have long championed the rights of homeowners, especially those 
facing mortgage foreclosure. I have worked with the Chairman of the 
House Judiciary Committee to include language that would relax the 
bankruptcy provisions to allow those facing mortgage foreclosure to 
restructure their debt to avoid foreclosure.

     Manager's Amendment

  Because I have long championed the rights of homeowners facing 
mortgage foreclose in the recent TARP bill and before the Judiciary 
Committee, I have worked with Chairman Conyers and his staff to add 
language that would make the bill stronger and that would help more 
Americans. I co-sponsored sections of the Manager's Amendment and I 
urge my colleagues to support the bill.
  Specifically, I worked with Chairman Conyers to ensure that in 
section 2 of the amendment, section 109(h) of the Bankruptcy Code would 
be amended to waive the mandatory requirement, under current law, that 
a debtor receive credit counseling prior to filing for bankruptcy 
relief. Under the amended language there is now a waiver that will 
apply where the debtor 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 proceeding 
against such residence.
  This is important because it affords the debtor the maximum relief 
without having to undergo a slow credit counseling process. This will 
help prevent the debtor's credit situation from worsening, potentially 
spiraling out of control, and result in the eventual loss of his or her 
home.
  Section 4 of the Manager's Amendment relaxes certain Bankruptcy 
requirements under Chapter 13 so that the debtor can modify the terms 
of the mortgage secured by his or her primary residence. This is an 
idea that I have long championed in the TARP legislation--the ability 
of debtors to modify their existing primary mortgages. Section 4 allows 
for a modification of the mortgage for a period of up to 40 years. Such 
modification cannot occur if the debtor fails to certify that it 
contacted the creditor before filing for bankruptcy. In this way, the 
language in the Manager's Amendment allows for the creditor to 
demonstrate that it undertook its ``last clear'' chance to work out the 
restructuring of the debt with its creditor before filing bankruptcy.
  Importantly, the Manager's Amendment amends the bankruptcy code to 
provide that a debtor, the debtor's property, and property of the 
bankruptcy estate are not liable for fees and costs incurred while the 
Chapter 13 case is pending and that arises from a claim for debt 
secured by the debtor's principal residence.

  Lastly, I worked to get language in the Manager's Amendment that 
would allow the debtors and creditors to negotiate before a declaration 
of bankruptcy is made. I made sure that the bill addresses present 
situations at the time of enactment where homeowners are in the process 
of mortgage foreclosure. This is done with a view toward consistency, 
predictability, and a hope that things will improve.

     Rules Committee

  During this time, debtors and average homeowners found themselves in 
the midst of a home mortgage foreclosure crisis of unprecedented 
levels. Many of the mortgage foreclosures were the result of subprime 
lending practices.
  I have worked with my colleagues to strengthen the housing market and 
the economy, expand affordable mortgage loan opportunities for families 
at risk of foreclosure, and strengthen consumer protections against 
risky loans in the future. Unfortunately, problems in the subprime 
mortgage markets have helped push the housing market into its worst 
slump in 16 years.
  Before the Rules Committee, I offered an amendment that would prevent 
homeowners

[[Page H3007]]

and debtors, who were facing mortgage foreclosure as a result of the 
unscrupulous and unchecked lending of predatory lenders and financial 
institutions, from having their mortgage foreclosure count against them 
in the determination of their credit score. It is an equitable result 
given that the debtors ultimately faced mortgage foreclosure because of 
the bad practices of the lender.
  Simply put, my amendment would prevent homeowners who have declared 
mortgage foreclosure as a result of subprime mortgage lending and 
mortgages from having the foreclosure count against the debtor/
homeowner in the determination of the debtor/homeowner's credit score.
  Specifically, my amendment language was the following:

     SEC. 205. FORBEARANCE IN CREATION OF CREDIT SCORE.

       (a) In General.--Section 609 of the Fair Credit Reporting 
     Act (15 U.S.C. 1681g) is amended by adding at the end the 
     following new subsection:
       ``(h) Foreclosure on Subprime Not Taken Into Account for 
     Credit Scores.--
       ``(1) In general.--A foreclosure on a subprime mortgage of 
     a consumer may not be taken into account by any person in 
     preparing or calculating the credit score (as defined in 
     subsection (f)(2)) for, or with respect to, the consumer.
       ``(2) Subprime defined.--The term `subprime mortgage' means 
     any consumer credit transaction secured by the principal 
     dwelling of the consumer that bears or otherwise meets the 
     terms and characteristics for such a transaction that the 
     Board has defined as a subprime mortgage.''.
       (b) Regulations.--The Board shall prescribe regulations 
     defining a subprime mortgage for purposes of the amendment 
     made by subsection (a) before the end of the 90-day period 
     beginning on the date of the enactment of this Act.
       (c) Effective Date.--The amendment made by subsection (a) 
     shall take effect at the end of the 30-day period beginning 
     on the date of the enactment of this Act and shall apply 
     without regard to the date of the foreclosure.

  The homeowners should not be required to pay for the bad acts of the 
lenders. It would take years for a homeowner to recover from a mortgage 
foreclosure. My amendment would have strengthened this already much 
needed and well thought out bill.
  I intend to offer a bill later this Congress to address this issue. I 
am delighted, however, that the Judiciary Committee has expressed their 
willingness to incorporate my language in the Conference language for 
this bill. Without a doubt, this issue is important to me and it is 
critical to Americans who are facing mortgage foreclosure and 
bankruptcy.

     Other Amendments

  There were four amendments that were made in order by the Rules 
Committee. I will address my support or non-support for each amendment.


                           conyers amendment

  I support the Manager's Amendment offered by Chairman Conyers. The 
amendment makes sense and makes clear that H.R. 1106 is intended to 
help those that cannot afford to repay their mortgage without 
intervention. Indeed it is strength to the underlying bill by providing 
finality to the decisions worked out by the bankruptcy courts. These 
decisions would provide finality between lenders and borrowers. 
Moreover, the debtors are afforded certain protections by the Second 
Degree Amendment. The Second Degree Amendment provides that the lender 
could receive additional funding from the sale of the foreclosed home.
  The Manager's Amendment would do the following:
  (1) require courts to use FHA appraisal guidelines where the fair 
market value of a home is in dispute;
  (2) deny relief to individuals who can afford to repay their 
mortgages without judicial mortgage modification; and
  (3) extend the negotiation period from 15 to 30 days, requiring the 
debtor to certify that he or she contacted the lender, provided the 
lender with income, expense and debt statements, and that there was a 
process for the borrower and lender to seek to reach agreement on a 
qualified loan modification.
  The Conyers Amendment would require a GAO study regarding the 
effectiveness of mortgage modifications outside of bankruptcy and 
judicial modifications, whether there should be a sunset, the impact of 
the amendment on bankruptcy courts, whether relief should be limited to 
certain types of homeowners. The GAO must analyze how bankruptcy judges 
restructure mortgages, including the number of judges disciplined as a 
result of actions taken to restore mortgages.
  The Conyers Amendment would clarify that loan modifications, workout 
plans or other loss mitigation plans are eligible for the servicer safe 
harbor. Further, it would require HUD to receive public input before 
implementing certain FHA approval provisions.
  With respect to the HOPE for Homeowners Program: recasts the 
prohibition against having committed fraud over the last 10 years from 
a freestanding prohibition to a borrower certification. The Conyers 
Amendment would amend the National Housing Act to broaden eligibility 
for Home Equity Conversion Mortgage (HECM) or ``reverse mortgage.''
  Provides that the GAO must submit to Congress a review of the effects 
of the judicial modification program.
  Requires the Comptroller of Currency, in coordination with the 
Director of Thrift Supervision, to submit reports to Congress on the 
volume of mortgage modifications and issue modification data collection 
and reporting requirements.
  Expresses the Sense of Congress that the Treasury Secretary should 
use amounts made available under the Act to purchase mortgage revenue 
bonds for single-family housing.
  Expresses the Sense of Congress that financial institutions should 
not foreclose on any principal homeowner until the loan modification 
programs included in H.R. 1106 and the President's foreclosure plan are 
implemented and deemed operational by the Treasury and HUD Secretaries.
  Establishes a Justice Department Nationwide Mortgage Fraud Task Force 
to coordinate anti-mortgage fraud efforts. Would provide that the 
Treasury Secretary shall provide that the limit on the maximum original 
principal obligation of a mortgage that may be modified using EESA 
funds shall not be less than the dollar limit on the maximum original 
principal obligation of a mortgage that may be purchased by the Federal 
Home Loan Mortgage Corporation that is in effect at the time the 
mortgage is modified.


                          PRICE, TOM AMENDMENT

  I oppose the Price Amendment. The Price Amendment provides that if a 
homeowner who has had a mortgage modified in a bankruptcy proceeding 
sells the home at a profit, the lender can recapture the amount of 
principal lost in the modification.
  I oppose the Price Amendment for the following reasons.
  First, the Price amendment would make homeowners into renters for 
life. It will lead to poorly maintained homes and lower property values 
for all of us. It takes away any incentive for homeowners to maintain 
their homes or insist on competitive sale prices.
  Second, the Manager's Amendment already allows lenders to get back a 
substantial portion of any amount a home appreciates after bankruptcy. 
But it leaves in place incentives for homeowners to maintain and 
improve homes.
  Third, the Price Amendment is opposed by the Center for Responsible 
Lending, Consumers Union, Leadership Conference on Civil Rights, 
National Association of Consumer Advocates, National Association of 
Consumer Bankruptcy Attorneys, National Community Reinvestment 
Coalition, National Consumer Law Center, National Legal Aid and 
Defender Association, National Policy and Advocacy Council on 
Homelessness, and USPIRG.
  For the foregoing reasons, I oppose the Price Amendment and I urge my 
colleagues to vote ``no'' on this amendment.


                         PETERS, GARY AMENDMENT

  I support this amendment. This amendment is straightforward and is 
intended to help the borrower by providing a last clear chance to 
garner much needed information. It is my hope that this information 
would be used to provide financial assistance and education to the 
consumer.
  In many cases, proper education about the use of credit and mortgages 
could have made all the difference in the consumers choices. Simply 
put, if the consumers made wise and informed credit decisions in the 
first instance, they might not have been in bankruptcy or facing 
foreclosure. I find this amendment incredibly prudent and helpful to 
debtors and consumers. I urge my colleagues to support this amendment.


                            TITUS AMENDMENT

  The Titus Amendment would require a servicer that receives an 
incentive payment under the HOPE for homeowners to notify all 
mortgagors under mortgages they service who are ``at-risk homeowners'' 
(as such term is defined by the Secretary), in a form and manner as 
shall be prescribed by the Secretary, that they may be eligible for the 
HOPE for Homeowners Program and how to obtain information regarding the 
program.
  The HOPE for Homeowners (H4H) program was created by Congress to help 
those at risk of default and foreclosure refinance into more 
affordable, sustainable loans. H4H is an additional mortgage option 
designed to keep borrowers in their homes.
  The program is effective from October 1, 2008 to September 30, 2011.

     How the program works

  There are four ways that a distressed homeowner could pursue 
participation in the HOPE for Homeowners program:
  1. Homeowners may contact their existing lender and/or a new lender 
to discuss how to qualify and their eligibility for this program.

[[Page H3008]]

  2. Servicers working with troubled homeowners may determine that the 
best solution for avoiding foreclosure is to refinance the homeowner 
into a HOPE for Homeowners loan.
  3. Originating lenders who are looking for ways to refinance 
potential customers out from under their high-cost loans and/or who are 
willing to work with servicers to assist distressed homeowners.
  4. Counselors who are working with troubled homeowners and their 
lenders to reach a mutually agreeable solution for avoiding 
foreclosure.
  It is envisioned that the primary way homeowners will initially 
participate in this program is through the servicing lender on their 
existing mortgage. Servicers that do not have an underwriting component 
to their mortgage operations will partner with an FHA-approved lender 
that does.
  Because I am committed to helping Americans obtain homes and remain 
in their homes, I support the HOPE for Homeowners Program and I support 
this amendment. I urge my colleagues to support this bill. Indeed, I 
feel personally vindicated that Congress has set aside a bill to 
address the issue of mortgage foreclosure, an issue that I have long 
championed in the 110th Congress.

     Housing, Foreclosures, and Texas

  Texas ranks 17th in foreclosures. Texas would have faired far worse 
but for the fact that homeowners enjoy strong constitutional 
protections under the state's home-equity lending law. These consumer 
protections include a 3% cap on lender's fees, 80% loan-to-value ratio 
(compared to many other states that allow borrowers to obtain 125% of 
their home's value), and mandatory judicial sign-off on any foreclosure 
proceeding involving a defaulted home-equity loan.
  Still, in the last month, in Texas alone there have been 30,720 
foreclosures and sadly 15,839 bankruptcies. Much of this has to do with 
a lack of understanding about finance--especially personal finance.
  Last year, American's Personal income decreased $20.7 billion, or 0.2 
percent, and disposable personal income (DPI) decreased $11.8 billion, 
or 0.1 percent, in November, according to the Bureau of Economic 
Analysis. Personal consumption expenditures (PCE) decreased $56.1 
billion, or 0.6 percent. In India, household savings are about 23 
percent of their GDP.
  Even though the rate of increase has showed some slowing, 
uncertainties remain. Foreclosures and bankruptcies are high and could 
still beat last year's numbers.
  Home foreclosures are at an all-time high and they will increase as 
the recession continues. In 2006, there were 1.2 million foreclosures 
in the United States, representing an increase of 42 percent over the 
prior year. During 2007 through 2008, mortgage foreclosures were 
estimated to result in a whopping $400 billion worth of defaults and 
$100 billion in losses to investors in mortgage securities. This means 
that one per 62 American households is currently approaching levels not 
seen since the Depression.
  The current economic crisis and the foreclosure blight has affected 
new home sales and depressed home value generally. New home sales have 
fallen by about 50 percent.
  One in six homeowners owes more on a mortgage than the home is worth 
raising the possibility of default. Home values have fallen nationwide 
from an average of 19% from their peak in 2006 and this price plunge 
has wiped out trillions of dollars in home equity. The tide of 
foreclosure might become self-perpetuating. The nation could be facing 
a housing depression--something far worse than a recession.
  Obviously, there are substantial societal and economic costs of home 
foreclosures that adversely impact American families, their 
neighborhoods, communities and municipalities. A single foreclosure 
could impose direct costs on local government agencies totaling more 
than $34,000.
  Recently, the Congress set aside $100 billion to address the issue of 
mortgage foreclosure prevention. I have long championed that money be a 
set aside to address this very important issue. I believe in 
homeownership and will do all within my power to ensure that Americans 
remain in their houses.

     Bankruptcy

  We have come full circle in our discussion today. The bill before us 
today is on bankruptcy and mortgage foreclosures.
  I have long championed in the first TARP bill that was introduced and 
signed late last Congress, that language be included to specifically 
address the issue of mortgage foreclosures. I had asked that $100 
billion be set aside to address that issue. Now, my idea has been 
vindicated as the TARP that was voted upon this week has included 
language that would give $100 billion to address the issue of mortgage 
foreclosure. I am continuing to engage in the dialogue with Leadership 
to provide monies to those in mortgage foreclosure. I have also asked 
for modification of homeowners' existing loans to avoid mortgage 
foreclosure.
  I believe that the rules governing these loans should be relaxed. 
These are indeed tough economic times that require tough measures. 
Again, I feel a sense of vindication on this point, because this bill, 
H.R. 1106 addresses this point.

     Credit Crunch

  A record amount of commercial real estate loans coming due in Texas 
and nationwide the next three years are at risk of not being renewed or 
refinanced, which could have dire consequences, industry leaders warn. 
Texas has approximately $27 billion in commercial loans coming up for 
refinancing through 2011, ranking among the top five states, based on 
data provided by research firms Foresight Analytics LLC and Trepp LLC. 
Nationally, Foresight Analytics estimates that $530 billion of 
commercial debt will mature through 2011. Dallas-Fort Worth has nearly 
$9 billion in commercial debt maturing in that time frame.
  Most of Texas' $27 billion in loans maturing through 2011--$18 
billion--is held by financial institutions. Texas also has $9 billion 
in commercial mortgage-backed securities, the third-largest amount 
after California and New York, according to Trepp.
  Mr. Chairman, my amendment would have helped alleviate these 
problems. Although my amendment language was not included in the bill, 
I am confident that it will be included in the Conference language.
  All in all, I believe that this bill is important and will do 
yeoman's work helping America get back on the right track with respect 
to the economy and the mortgage foreclosure crisis. I wholeheartedly 
urge my colleagues to support this bill.
  Mr. GOODLATTE. Mr. Chairman, I yield myself 3 minutes.
  First, I'd like to respond to the gentleman from Vermont who said 
that Citigroup endorsed this legislation. Well, I must tell you the 
American Banking Association doesn't support this, nor do the community 
bankers, the bankers who still have their heads above water all across 
my congressional district and many other districts across the country 
that are making mortgage loans day in and day out. They don't support 
this legislation. But a bank that is receiving already tens of billions 
of dollars in government assistance supports it. That should convince 
us that this legislation leads us in the right direction?
  Then to the gentleman from Georgia, I would point out that the 
Congress, a number of years ago, created a special Chapter 12 
bankruptcy proceeding for farmers, and that was a temporary change in 
the law as well, as this one is. The gentleman is correct; it only 
applies to existing mortgages. But that law, created many, many years 
ago, still exists because it's been extended and extended, and we are 
at risk of having the same thing happen here, particularly when the 
mindset is that we should turn to the advice of banks that are failing 
to tell us a good way to handle a problem that banks that are 
succeeding say it is a bad, bad practice.
  And I also want to speak against this amendment. Far from making 
bankruptcy a last resort, this gives homeowners two bites at the apple. 
Even if they obtain the Obama compliant loan modification from their 
lenders, i.e., workouts that meet the terms of President Obama's 
mortgage program, they can still go into bankruptcy. Once there, they 
can shop for a better deal from the bankruptcy court. Lenders, 
meanwhile, have to honor the already-cut voluntary deals all the way 
through bankruptcy.
  At the end of the case, the homeowner keeps whichever deal is 
sweeter. That's not making bankruptcy a last resort. That's 
guaranteeing abuse of both voluntary modification and bankruptcy. We're 
going to see a run on the bankruptcy courts if this legislation is 
adopted.
  Meanwhile, what happens to the borrower who rejects an offer meeting 
President Obama's terms? Nothing. The bankruptcy court can 
theoretically refuse to confirm a borrower's cramdown plan, but under 
the terms of the amendment, that will likely happen only when the 
lender offered a modification without a voluntary cramdown and the 
borrower has no need for bankruptcy relief anyway.
  And what about borrowers who are within 30 days of foreclosure sales? 
They don't even have to contact their lenders about voluntary 
modifications. So none of the amendment modifications do not apply.
  The new manager's amendment does nothing to change this exception 
that

[[Page H3009]]

swallows the whole bill. As a result, borrowers who may have entered 
into mortgages that they shouldn't have in the first place, and 
bankruptcy attorneys can game the system by simply waiting until 
borrowers are within the 30 days of a foreclosure sale to file for 
bankruptcy.
  I reserve the balance of my time.
  Ms. ZOE LOFGREN of California. Mr. Chairman, I would just note that 
the National Association of Community Development Credit Unions has 
announced their support of this measure as altered.
  I yield 2 minutes to the gentleman from North Carolina (Mr. Miller), 
who's worked so hard on this measure, who was the author of the 
underlying bill in the last Congress.
  Mr. MILLER of North Carolina. Mr. Chairman, this has been a pretty 
remarkable debate. We've heard we're now going down a dangerous road, 
and we'll begin the modification or altering contracts in court. Mr. 
Chairman, that is what bankruptcy does. That is the rule of law. We do 
enforce contracts. Except when people get hopelessly in debt, we allow 
them to draw a line to pay what they can, and then to get a fresh start 
in life. That's what bankruptcy does.
  In fact, home mortgages is the only kind of debt that can't be 
modified, and it is not because that was brought down on stone tablets 
from Mount Sinai. That exception is just a special-interest give which 
we see around here all the time. In 1978, the mortgage industry got 
that exception as a special-interest provision.
  We've heard that this will result in arbitrary modifications. No. 
There are more than a million bankruptcy cases a year. We have a pretty 
good idea what bankruptcy judges are going to do. They're going to do 
the same thing with this kind of interest that they do with every 
other, including family farms, and this is exactly like the treatment 
of family farms.
  We've heard it will help speculators. No. Speculators already can be 
helped. Investors already can modify their mortgage in bankruptcy. It 
is only people who live in their homes who can't get relief. We've 
heard it will help people who bought too much house. No. If you can't 
afford a 100-percent mortgage at higher than the prime rate, it doesn't 
help you.
  The most infuriating argument is that the opposition is really not 
about helping the banking industry and the securities industry. It's 
all about helping the little people that's going to increase interest 
rates on the little people. Mr. Chairman, I have been hearing that the 
whole time I have been in Congress. It's never been about helping the 
banks get rich, according to the banks. It's always been about helping 
the little people. No matter how crooked their business practices may 
seem on their face, it's always something they need to do to help the 
little people.
  Here's a reality. Two years ago, just a couple years ago, 40 percent 
of all corporate profits were for the financial services' sector, 40 
percent. That's after all of their salaries and their bonuses and their 
$50 million corporate jets and their golf tournaments and everything 
else.
  The Acting CHAIR. The time of the gentleman has expired.
  Ms. ZOE LOFGREN of California. Mr. Chairman, I would yield the 
gentleman an additional 15 seconds.
  Mr. MILLER of North Carolina. This amendment simply gives lenders one 
last chance to make a voluntary modification. That is undoubtedly 
better for a borrower to get a voluntary modification rather than 
having to go through bankruptcy.
  I support this amendment.
  Mr. GOODLATTE. Mr. Chairman, I yield myself 30 seconds.
  First, I say to the gentlewoman from California that the largest 
credit union association in the world, Credit Union National 
Association, a member-owned collection of credit unions around the 
United States, strongly opposes this legislation. When we talk about 
the ``little people'' and the organizations that reach out and help 
people day-to-day with loans, they know the impact that this will have.
  And secondly, to the gentleman from North Carolina, the fact of the 
matter is cramdowns were entirely prohibited going back to the 1898 
law. So for more than 100 years, when they liberalized in other areas, 
they simply continued in this area. It's not true that they have only 
prohibited cramdowns since 1978.
  Mr. Chairman, I yield 2 minutes to the gentleman from Iowa (Mr. 
King).
  Mr. KING of Iowa. I thank the gentleman from Virginia for yielding.
  Mr. Chairman, this amendment before us allows for actual fraud, 
misrepresentation or obtaining a loan or refinancing by false 
pretenses. It's specific. We passed an amendment in the Judiciary 
Committee that prohibited such things, but the language has been 
changed after the fact. The language has been changed now so that it 
reads that the court 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 modification claim.
  In other words, whatever kind of fraud and misrepresentation or false 
pretenses might be used, it's not going to be considered by a cramdown 
court unless there is an actual conviction. That's a breathtaking 
position to take in print here in the United States Congress.
  I think this cramdown, when you break the contract, you allow a 
judge--a judge perhaps yet to be appointed, a judge with a different 
idea on what a contract is--to break that contract, sever it apart, and 
readjust the principal and the interest to meet what the judge believes 
is convenient to the borrower and give them two bites at the apple and 
let them pick whatever is the best deal for them?
  I can tell you what happens, Mr. Chairman, and that is this: The 
degree of risk must be proportional to the potential for profit. That's 
the business equation. Lenders will not loan money unless they have a 
prospective profit on the other side of this.
  So that means that they're going to ask for more down money, and 
they're going to ask for more interest, and there will be fewer people 
owning homes, not more. There may be some temporary relief over this 
window over the next couple of years, and maybe this economy comes back 
around. But the long run is this: We'll have fewer homeowners, not 
more. The price for that will end up being more public housing, not 
less, to replace the homeowners that aren't able to own their own home.
  This is the public housing promotion bill in the end. That's where it 
takes us. It was misplaced thinking to pass the Community Reinvestment 
Act, it's misplaced thinking not to hold Fannie and Freddie, and it's 
misplaced thinking to push this cramdown.
  Ms. ZOE LOFGREN of California. Mr. Chairman, may I inquire as to the 
time remaining on each side?
  The Acting CHAIR. The gentlelady from California has 5\3/4\ minutes, 
and the gentleman from Virginia has 4\1/2\ minutes.
  Ms. ZOE LOFGREN of California. Mr. Chairman, I yield to the gentleman 
from Florida (Mr. Meek) 1 minute.
  Mr. MEEK of Florida. Mr. Chairman, I just want to let the Members 
know on this great piece of legislation and this amendment that we're 
debating now that we have a mortgage fraud task force to be created in 
the Department of Justice.
  This same language passed this House 350-23 in the last Congress. I 
think it's important, with this Nationwide task force, we have a number 
of communities and a number of victims of those individuals that have 
obtained loans and tried to get even second loans to be able to save 
their homes, they find themselves falling to these predators that are 
out there now.
  This task force will be a voluntary participation between Federal, 
State and local law enforcement officials to be able to close down on 
these individuals. In my State of Florida, we came in first in 2006, 
2007, 2008 of having these mortgage fraud individuals carrying out 
their acts against Floridians. I think it's also important that the 
increase was 168 percent in Florida. And as we look at making sure that 
we protect not only the borrower but also making sure that lenders can 
be trusted in this process, that we do have bad apples amongst the 
lending community.
  I thank you for allowing me this minute.
  Mr. GOODLATTE. Mr. Chairman, at this time I am pleased to yield 1\1/
2\ minutes to the gentleman from Georgia (Mr. Price).
  Mr. PRICE of Georgia. I thank the gentleman for yielding. I want to 
thank him for his leadership on this issue.

[[Page H3010]]

  Mr. Chairman, I rise to just point out a couple fallacies on the 
arguments on the other side.
  I think it's important that everybody appreciate why this law is in 
place in the first place, why isn't cramdown allowed in a bankruptcy on 
a primary residence. And the reason, Mr. Chairman, as you well know, is 
that it's to encourage primary residence ownership. If lenders don't 
know what amount of principal they are going to be able to get back on 
any loan, then they will not be encouraged to loan men and women across 
this Nation money to purchase a primary reason. That's why. It's very 
simple.
  So what this will do is make it so there will be less money available 
for homeowner purchasers, there will be less money available for 
individuals to gain their primary residence.
  Higher interest rates will certainly occur. The gentleman from 
Vermont, I chuckled when he said that Citigroup was supporting this. 
Well, as has been said in the past, Mr. Chairman, ``Surprise, surprise, 
surprise.'' Citigroup is supporting it because it gets billions of 
dollars from the Federal Government. What can it do? In this political 
economy, under this leadership and this administration, in this 
political economy, politicians are directing who the winners and losers 
are, who gets money; and consequently, Citigroup can do nothing but 
support what this majority and this administration wants.
  It's a political economy. It's not a market economy. We need to 
return to a market economy so that the American people can realize 
their hopes and dreams and make it so that more individuals are able to 
purchase their primary residence without the imposition of the Federal 
Government.

                              {time}  1245

  Ms. ZOE LOFGREN of California. Mr. Chairman, I would like to yield 15 
seconds to Mr. Marshall.
  Mr. MARSHALL. To the gentlemen from Georgia and Virginia, again, this 
only applies to existing debt. Even if the bill is extended, its terms 
only apply to existing debt now. You would have to change that for it 
to apply to future loans.
  The argument, if it's valid at all--and there is, frankly, 
scholarship to the contrary--but the argument that the price of a home 
mortgage has gone up just doesn't hold water.
  Ms. ZOE LOFGREN of California. Mr. Chairman, I yield 1 minute to a 
member of the committee, Mr. Maffei.
  Mr. MAFFEI. I thank the gentlewoman for yielding and for her 
leadership on this bill.
  I, too, had some hesitation about broadening the bankruptcy judges' 
jurisdiction on this. But what I did was I listened to the other side 
and I worked with the gentlewoman from California and the distinguished 
chairman from Michigan, and we were able to get a lot of changes in 
this bill--and particularly in this manager's amendment--that would 
make sure that the lender and the borrower would get together, that 
there would be a safe haven to protect banks and make sure that they 
could, in fact, renegotiate these loans, and to keep anyone from using 
this for anything but an absolute last resort. However, as a last 
resort, it's a necessary, because if we don't have this, then whatever 
the borrower does, they may not have recourse.
  In my district, this is not the biggest problem, foreclosures are not 
the biggest thing. But yet, even if one family comes to me and says, 
we're desperate, we have to declare bankruptcy, and if we had a second 
home, it would be covered, if we had a yacht, it would be covered, but 
our first home would not be covered, that's a very difficult thing to 
explain. So I support the manager's amendment.
  Ms. ZOE LOFGREN of California. Let me mention one point that has been 
discussed, which is the potential that enacting this legislation would 
somehow impact future interest rates for principal mortgages.
  I would like to mention that Mark Zandi, who was Senator John 
McCain's economic adviser during his campaign for President, said this: 
``Given that the total cost of foreclosure to lenders is much greater 
than that associated with Chapter 13 bankruptcy, there is no reason to 
believe that the cost of mortgage credit across all mortgage loan 
products should rise.''
  I think that this is a bogus argument. And I think that if we don't 
act to provide fairness to this system, we will be letting down our 
constituents, and once again, the little guy will lose.
  Mr. Chairman, I reserve the balance of my time.
  Mr. GOODLATTE. Mr. Chairman, I yield myself 1 minute.
  Some of the other issues raised in this manager's amendment that need 
to be pointed out are that the amendment provides an alternative to 
cramdown of principal, but astoundingly the alternative is free money. 
If the judge does not want to give a cramdown, he can just rewrite the 
mortgage as a no-interest loan over the full term of a new 30-year 
deal. Now, just like there's no such thing as a free lunch, there's no 
such thing as free money for banks or credit unions to lend to the 
people who come to them.
  So while the gentleman--in fact, several have made the point that 
this only applies to existing mortgages. The fact of the matter is the 
money to pay for the modifications that are made here has got to come 
from someplace. And while I remain concerned that all you would have to 
do in the future would be to advance the enactment date--everything 
else in the law would be the same--so you could continue this policy 
and make it permanent, even if you didn't, money from future borrowers 
is what's going to be used to fund these changes in current mortgages. 
It's wrong.
  Ms. ZOE LOFGREN of California. Mr. Chairman, may I inquire as to how 
much time remains on each side.
  The Acting CHAIR. The gentlelady from California has 3 minutes 
remaining and the gentleman from Virginia has 2 minutes remaining.
  Ms. ZOE LOFGREN of California. I would like to yield 1 minute to the 
gentleman from Georgia (Mr. Marshall) at this point.
  Mr. MARSHALL. In reply to my friend from Virginia, in his observation 
that, in fact, there are going to be losses and those losses that might 
be incurred as a result of foreclosures for less than the amount of the 
loan, all the expenses that are involved in attempting a foreclosure, 
the expenses associated with maintaining vacant properties--which are 
huge, by the way--all of those losses could wind up causing credit to 
increase in the future. Obviously, I described those losses the way I 
did because, frankly, having a bankruptcy write down is similar to the 
other kinds of losses that are associated with a foreclosure setting, a 
setting in which there is a distressed property. And in most instances, 
the result for the creditor in a bankruptcy process is less expensive 
than in other processes available to creditors in circumstances like 
these.
  Bottom line, if we can limit these vacancies, we limit the falling 
home values, which helps the portfolios of most of the lenders that I 
know.
  Mr. GOODLATTE. Mr. Chairman, I yield myself the remaining time.
  Mr. Chairman, the bottom line, in response to the gentleman from 
Georgia's argument, is that his case is the strongest one for leaving 
the bankruptcy laws the way they are because the incentives already 
exist for them to avoid the cost that he described. So somebody who is 
struggling right now with their mortgage payments, the incentive exists 
for them to work with the financial institution and for the financial 
institution to work with them so they don't face the uncertainties that 
occur in bankruptcy court.
  So, the bottom line is that what this is going to do is it's going to 
pass along to future people who want to buy homes, whether the law is 
extended in the future or not, the cost that will be borne by credit 
unions and community banks and others who are making these mortgages 
today--they have to cover costs that are unanticipated when they made 
the mortgages--they're going to have to pass them along in the future. 
To the extent that they can voluntarily work that out with the existing 
homeowner, that is the best solution. But that occurs right now and 
that incentive exists right now under the law. To change the law in the 
manner that's provided for here, even with the changes in this 
amendment, simply does not work. And it does not give the assurance to 
those who said that there needs to be a second chance, a second 
opportunity to negotiate between the lender and the homeowner 
voluntarily

[[Page H3011]]

because, as I pointed out earlier, any clever bankruptcy attorney will 
advise his client to simply wait until they're within 30 days of 
foreclosure, then they don't have to engage in that, they can go 
straight to the bankruptcy court, bypass exactly what he was calling 
for happening, and go to the court and see what they can accomplish 
there under this very, very harmful law from the standpoint of the 
health of currently healthy banking institutions.
  So I urge my colleagues to oppose this amendment and to oppose the 
underlying bill. This is not the way to keep a healthy system by 
allowing people to continue to borrow and buy homes.
  Ms. ZOE LOFGREN of California. Mr. Chairman, I yield 30 seconds to 
the gentleman from Georgia, who, I would like to point out, was 
actually, in his prior life before Congress, an expert in this area of 
the law.
  Mr. MARSHALL. Again, to my friend from Virginia, the bankruptcy 
process is set up so that the creditor receives, essentially in fair 
value, the treatment that the creditor otherwise would have received.
  And the reality is, in most instances--almost all instances--debtors 
who default on their mortgages have already got huge problems with 
other creditors and other debt, and lenders typically know that it's 
just throwing good money after bad to spend an awful lot of time on 
workouts. And that's why we've seen the programs that we've put in 
place thus far in an attempt to stem the foreclosures and the vacancies 
that are hurting all of us, those programs aren't working, and it's in 
large part because these debtors need relief from bankruptcy. Outside 
bankruptcy, for the most part it is just not going to work.
  Ms. ZOE LOFGREN of California. Mr. Chairman, I yield myself the 
remaining time.
  Nearly six million households are facing the possibility of 
foreclosure in our country. And as a result, responsible families who 
did everything right, who have a traditional mortgage, are facing 
foreclosure or their neighborhoods are struggling. It's estimated that 
each foreclosed home reduces the price of the surrounding property--
people who did nothing wrong--by 9 percent, or sometimes more. That's 
when the meth dealers move that is the ``sometimes more.''
  This bill takes a number of steps. We've talked about bankruptcy, but 
that's just a small part of it. It provides a safe harbor for servicers 
to modify loans. It increases the FDIC insured rate for banks. It makes 
improvements to the HOPE for Homeowners Program. But it also narrowly 
affects the exemption for primary residences under Chapter 13.
  As has been pointed out, speculators can go into Chapter 13 and get 
complete relief; it's only the individual homeowner who is not able to 
get that relief. That's just not fair. There's no way you can possibly 
defend how that is fair, that the big guys and the speculators get 
their way, but the individual struggling homeowner does not.
  We have worked very hard in these last few weeks to narrow this 
provision, to listen to every objection that was honestly made, that 
was credible, and to accommodate it. This amendment is a consensus 
measure that makes the bill better. I urge its passage.
  Mr. CONYERS. Mr. Chair, Title I of H.R. 1106, the Helping Families 
Save Their Homes Act of 2009, is based in part on H.R. 200, legislation 
approved by the Judiciary Committee last month to give families whose 
home mortgage is in distress a better opportunity to come to terms with 
their lender on workable payment terms--more realistically based on 
current market interest rates and current home market values.
  Because the provisions in title I of this bill differ in a number of 
respects from H.R. 200 as reported, and differ further with the 
adoption of the manager's amendment, I am inserting in the Record a 
section-by-section analysis of this bill, as a further supplement to 
the legislative history in the floor debate today and last week, and in 
the hearings and committee report for H.R. 200.

   H.R. 1106, the ``Helping Families Save Their Homes Act of 2009,'' 
  Section-by-Section Explanation (as Amended by the Revised Manager's 
                               Amendment)

       Section 1. Short Title; Table of Contents. Subsection (a) 
     sets forth the short title of this Act as the ``Helping 
     Families Save Their Homes Act of 2009.'' Subsection (b) 
     consists of the table of contents.


              Title I--Prevention of Mortgage Foreclosures

     Subtitle A--Modification of residential mortgages
       Section 100. Bankruptcy Code section 101 defines various 
     terms. Section 100 amends this provision to add a definition 
     of ``qualified loan modification,'' which is defined as a 
     loan modification agreement made in accordance with the 
     guidelines of the Obama Administration's Homeowner 
     Affordability and Stability Plan, as implemented on March 4, 
     2009 with respect to a loan secured by a senior security 
     interest in the debtor's principal residence. To qualify as 
     such, the agreement must reduce the debtor's mortgage payment 
     (including principal and interest) and payments for various 
     other specified expenses (i.e., real estate taxes, hazard 
     insurance, mortgage insurance premium, homeowners' 
     association dues, ground rent, and special assessments) to a 
     percentage of the debtor's income in accordance with such 
     guidelines. The payment may not include any period of 
     negative amortization and it must fully amortize the 
     outstanding mortgage principal. In addition, the agreement 
     must not require the debtor to pay any fees or charges to 
     obtain the modification. And, the agreement must permit the 
     debtor to continue to make these payments notwithstanding the 
     debtor having filed a bankruptcy case as if he or she had not 
     filed for such relief.
       Section 101. Eligibility for Relief. Bankruptcy Code 
     section 109(e) sets forth secured and unsecured debt limits 
     to establish a debtor's eligibility for relief under chapter 
     13. Section 101 of the Act amends this provision to provide 
     that the computation of debts does not include the secured or 
     unsecured portions of debts secured by the debtor's principal 
     residence, under certain circumstances. The exception applies 
     if the value of the debtor's principal residence as of the 
     date of the order for relief under chapter 13 is less than 
     the applicable maximum amount of the secured debt limit 
     specified in section 109(e). Alternatively, the exception 
     applies if the debtor's principal residence was sold in 
     foreclosure or the debtor surrendered such residence to the 
     creditor and the value of such residence as of the date of 
     the order for relief under chapter 13 is less than the 
     secured debt limit specified in section 109(e). This 
     amendment is not intended to create personal liability on a 
     debt if there would not otherwise be personal liability on 
     such debt.
       In addition, section 101 amends Bankruptcy Code section 
     109(h) to waive the mandatory requirement that a debtor 
     receive credit counseling prior to filing for bankruptcy 
     relief, under certain circumstances. The waiver applies in a 
     chapter 13 case where the debtor 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 (or has commenced) a foreclosure proceeding 
     against such residence.
       Section 102. Prohibiting Claims Arising from Violations of 
     the Truth in Lending Act. Under the Truth in Lending Act, a 
     mortgagor has a right of rescission with respect to a 
     mortgage secured by his or her residence, under certain 
     circumstances. Bankruptcy Code section 502(b) enumerates 
     various claims of creditors that are not entitled to payment 
     in a bankruptcy case, subject to certain exceptions. Section 
     102 amends Bankruptcy Code section 502(b) to provide that a 
     claim for a loan secured by a security interest in the 
     debtor's principal residence is not entitled to payment in a 
     bankruptcy case to the extent that such claim is subject to a 
     remedy for rescission under the Truth in Lending Act, 
     notwithstanding the prior entry of a foreclosure judgment. In 
     addition, section 102 specifies that nothing in this 
     provision may be construed to modify, impair, or supersede 
     any other right of the debtor.
       Section 103. Authority to Modify Certain Mortgages. Under 
     Bankruptcy Code section 1322(b)(2), a chapter 13 plan may not 
     modify the terms of a mortgage secured solely by real 
     property that is the debtor's principal residence. Section 
     103 amends Bankruptcy Code section 1322(b) to create a 
     limited exception to this prohibition. The exception only 
     applies to a mortgage that: (1) originated before the 
     effective date of this provision; and (2) is the subject of a 
     notice that a foreclosure may be (or has been) commenced with 
     respect to such mortgage.
       In addition, the debtor must certify pursuant to new 
     section 1322(h) that he or she contacted--not less than 30 
     days before filing for bankruptcy relief--the mortgagee (or 
     the entity collecting payments on behalf of such mortgagee) 
     regarding modification of the mortgage. The debtor must also 
     certify that he or she provided the mortgagee (or the entity 
     collecting payments on behalf of such mortgagee) a written 
     statement of the debtor's current income, expenses, and debt 
     in a format that substantially conforms with the schedules 
     required under Bankruptcy Code section 521 or with such other 
     form as promulgated by the Judicial Conference of the United 
     States. Further, the certification must include a statement 
     that the debtor considered any qualified loan modification 
     offered to the debtor by the mortgagee (or the entity 
     collecting payments on behalf of such holder). This 
     requirement does not apply if the foreclosure sale is 
     scheduled to occur within 30 days of the date on which the 
     debtor files for bankruptcy relief. If the chapter 13 case is 
     pending at the time new section 1322(h) becomes effective, 
     then the

[[Page H3012]]

     debtor must certify that he or she attempted to contact the 
     mortgagee (or the entity collecting payments on behalf of 
     such mortgagee) regarding modification of the mortgage before 
     either: (1) filing a plan under Bankruptcy Code section 1321 
     that contains a modification pursuant to new section 
     1322(b)(11); or (2) modifying a plan under Bankruptcy Code 
     section 1323 or section 1329 to contain a modification 
     pursuant to new section 1322(b)(11).
       Under new section 1322(b)(11), the debtor may propose a 
     plan modifying the rights of the mortgagee (and the rights of 
     the holder of any claim secured by a subordinate security 
     interest in such residence) in several respects. It is 
     important to note that the intent of new section 
     1322(b)(11) is permissive. Accordingly, a chapter 13 may 
     propose a plan that proposes any or all types of 
     modification authorized under section 1322(b)(11).
       First, the plan may provide for payment of the amount of 
     the allowed secured claim as determined under section 
     506(a)(1). In making such determination, the court, pursuant 
     to new section 1322(i), must use the fair market value of the 
     property as of when the value is determined. If the issue of 
     value is contested, the court must determine such value in 
     accordance with the appraisal rules used by the Federal 
     Housing Administration.
       Second, the plan may prohibit, reduce, or delay any 
     adjustable interest rate applicable on and after the date of 
     the filing of the plan.
       Third, it may extend the repayment period of the mortgage 
     for a period that is not longer than the longer of 40 years 
     (reduced by the period for which the mortgage has been 
     outstanding) or the remaining term of the mortgage beginning 
     on the date of the order for relief under chapter 13.
       Fourth, the plan may provide for the payment of interest at 
     a fixed annual rate equal to the currently applicable average 
     prime offer rate as of the date of the order for relief under 
     chapter 13, as determined pursuant to certain specified 
     criteria. The rate must correspond to the repayment term 
     determined under new section 1322(b)(11)(C)(i) as published 
     by the Federal Financial Institutions Examination Council in 
     its table entitled, ``Average Prime Offer Rates--Fixed.'' In 
     addition, the rate must include a reasonable premium for 
     risk.
       Fifth, the plan, pursuant to new section 1322(b)(11)(D), 
     may provide for payments of such modified mortgage directly 
     to the holder of the claim or, at the discretion of the 
     court, through the chapter 13 trustee during the term of the 
     plan. The reference in new section 1322(b)(11)(D) to ``holder 
     of the claim'' is intended to include a servicer of such 
     mortgage for such holder. It is anticipated that the court, 
     in exercising its discretion with respect to allowing the 
     debtor to make payments directly to the mortgagee or by 
     requiring payments to be made through the chapter 13 trustee, 
     will take into consideration the debtor's ability to pay the 
     trustee's fees on payments disbursed through the trustee.
       New section 1322(g) provides that a claim may be reduced 
     under new section 1322(b)(11)(A) only on the condition that 
     the debtor agrees to pay the mortgagee a stated portion of 
     the net proceeds of sale should the home be sold before the 
     completion of all payments under the chapter 13 plan or 
     before the debtor receives a discharge under section 1328(b). 
     The debtor must pay these proceeds to the mortgagee within 15 
     days of when the debtor receives the net sales proceeds. If 
     the residence is sold in the first year following the 
     effective date of the chapter 13 plan, the mortgagee is to 
     receive 90 percent of the difference between the sales price 
     and the amount of the claim as originally determined under 
     section 1322(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 
     new section 1322(b)(11)(A). If the residence is sold in 
     the second year following the effective date of the 
     chapter 13 plan, then the applicable percentage is 70 
     percent. If the residence is sold in the third year 
     following the effective date of the chapter 13 plan, then 
     the applicable percentage is 50 percent. If the residence 
     is sold in the fourth year following the effective date of 
     the chapter 13 plan, then the applicable percentage is 30 
     percent. If the residence is sold in the fifth year 
     following the effective date of the chapter 13 plan, then 
     the applicable percentage is ten percent. It is the intent 
     of this provision that if the unsecured portion of the 
     mortgagee's claim is partially paid under this provision 
     it should be reconsidered under 502(j) and reduced 
     accordingly.
       Section 104. Combating Excessive Fees. Section 104 amends 
     Bankruptcy Code section 1322(c) to provide that the debtor, 
     the debtor's property, and property of the bankruptcy estate 
     are not liable for a fee, cost, or charge that is incurred 
     while the chapter 13 case is pending and that arises from a 
     claim for debt secured by the debtor's principal residence, 
     unless the holder of the claim complies with certain 
     requirements. It is the intent of this provision that its 
     reference to a fee, cost, or charge includes an increase in 
     any applicable rate of interest for such claim. It also 
     applies to a change in escrow account payments.
       To ensure such fee, cost, or charge is allowed, the 
     claimant must comply with certain requirements. First, the 
     claimant must file with the court and serve on the chapter 13 
     trustee, the debtor, and the debtor's attorney an annual 
     notice of such fee, cost, or charge (or on a more frequent 
     basis as the court determines) before the earlier of one year 
     of when such fee, cost, or charge was incurred or 60 days 
     before the case is closed.
       Second, the fee, cost, or charge must be lawful under 
     applicable nonbankruptcy law, reasonable, and provided for in 
     the applicable security agreement.
       Third, the value of the debtor's principal residence must 
     be greater than the amount of such claim, including such fee, 
     cost or charge.
       If the holder fails to give the required notice, such 
     failure is deemed to be a waiver of any claim for such fees, 
     costs, or charges for all purposes. Any attempt to collect 
     such fees, costs, or charges constitutes a violation of the 
     Bankruptcy Code's discharge injunction under section 
     524(a)(2) and the automatic stay under section 362(a), 
     whichever is applicable.
       Section 104 further provides that a chapter 13 plan may 
     waive any prepayment penalty on a claim secured by the 
     debtor's principal residence.
       Section 105. Confirmation of Plan. Bankruptcy Code section 
     1325 sets forth the criteria for confirmation of a chapter 13 
     plan. Section 105 amends section 1325(a)(5) (which specifies 
     the mandatory treatment that an allowed secured claim 
     provided for under the plan must receive) to provide an 
     exception for a claim modified under new section 1322(b)(11). 
     The amendment also clarifies that payments under a plan that 
     includes a modification of a claim under new section 
     1322(b)(11) must be in equal monthly amounts pursuant to 
     section 1325(a)(5)(B)(iii)(I).
       In addition, section 105 specifies certain protections for 
     a creditor whose rights are modified under new section 
     1322(b)(11). As a condition of confirmation, new section 
     1325(a)(10) requires a plan to provide that the creditor must 
     retain its lien until the later of when: (1) the holder's 
     allowed secured claim (as modified) is paid; (2) the debtor 
     completes all payments under the chapter 13 plan; or (3) if 
     applicable, the debtor receives a discharge under section 
     1328(b).
       Section 105 also provides standards for confirming a 
     chapter 13 plan that modifies a claim pursuant to new section 
     1322(b)(11). First, the debtor cannot have been convicted of 
     obtaining by actual fraud the extension, renewal, or 
     refinancing of credit that gives rise to such modified claim. 
     Second, the modification must be in good faith. Lack of good 
     faith exists if the debtor has no need for relief under this 
     provision 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 
     modification under section 1322(b)(11) that reduces the 
     principal amount of the loan is made in good faith, the court 
     must consider whether the holder of the claim (or the entity 
     collecting payments on behalf of such holder) has offered the 
     debtor a qualified loan modification that would enable the 
     debtor to pay such debts and such loan without reducing the 
     principal amount of the mortgage.
       Section 105 further amends section 1325 to add a new 
     provision. New section 1325(d) authorizes the court, on 
     request of the debtor or the mortgage holder, to confirm a 
     plan proposing to reduce the interest rate lower than that 
     specified in new section 1322(b)(11)(C)(ii), provided: (1) 
     the modification does not reduce the mortgage principal; (2) 
     the total mortgage payment is reduced through interest rate 
     reduction to the percentage of the debtor's income that is 
     the standard for a modification in accordance with the Obama 
     Administration's Homeowner Affordability and Stability Plan, 
     as implemented on March 4, 2009; (3) the court determines 
     that the debtor can afford such modification in light of the 
     debtor's financial situation, after allowance of expense 
     amounts that would be permitted for a debtor subject to 
     section 1325(b)(3), 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 chapter 13 
     and thereafter; and (4) the debtor is able to prevent 
     foreclosure and pay a fully amortizing 30-year loan at such 
     reduced interest rate without such reduction in principal. If 
     the mortgage holder accepts a debtor's proposed modification 
     under this provision, the plan's treatment is deemed to 
     satisfy the requirements of section 1325(a)(5)(A) and the 
     proposal should not be rejected by the court.
       Section 106. Discharge. Bankruptcy Code section 1328 sets 
     forth the requirements by which a chapter 13 debtor may 
     obtain a discharge and the scope of such discharge. Section 
     106 amends section 1328(a) to clarify that the unpaid portion 
     of an allowed secured claim modified under new section 
     1322(b)(11) is not discharged. This provision is not intended 
     to create a claim for a deficiency where such a claim would 
     not otherwise exist.
  Section 107. Standing Trustee Fees. Section 108(a) amends 28 U.S.C. 
Sec. 586(e)(1)(B)(i) to provide that a chapter 13 trustee may receive a 
commission set by the Attorney General of no more than four percent on 
payments made under a chapter 13 plan and disbursed by the chapter 13 
trustee to a creditor whose claim was modified under Bankruptcy Code 
section 1322(b)(11), unless the bankruptcy court waives such fees based 
on a determination that the debtor has income less

[[Page H3013]]

than 150 percent of the official poverty line applicable to the size of 
the debtor's family and payment of such fees would render the debtor's 
plan infeasible.
  With respect to districts not under the United States trustee system, 
section 108(b) makes a conforming revision to section 302(d)(3) of the 
Bankruptcy Judges, United States Trustees, and Family Farmer Bankruptcy 
Act of 1986.
  Section 108. Effective Date; Application of Amendments. Section 
108(a) provides that this measure and the amendments made by it, except 
as provided in subsection (b), take effect on the Act's date of 
enactment.
  Section 108(b)(1) provides, except as provided in paragraph (2), that 
the amendments made by this measure apply to cases commenced under 
title 11 of the United States Code before, on, or after the Act's date 
of enactment.
  Section 108(b)(2) specifies that paragraph (1) does not apply with 
respect to cases that are closed under the Bankruptcy Code as of the 
date of the enactment of this Act.
  Section 109. GAO Study. Section 109 requires the Government 
Accountability Office to complete a study and to submit a report to the 
House and Senate Judiciary Committees within two years from the 
enactment of this Act a report. The report must contain the results of 
the study of: (1) the number of debtors who filed cases under chapter 
13, during the one-year period beginning on the date of the enactment 
of this Act for the purpose of restructuring their principal residence 
mortgages; (2) the number of mortgages restructured under this Act that 
subsequently resulted in default and foreclosure; (3) a comparison 
between the effectiveness of mortgages restructured under programs 
outside of bankruptcy, such as Hope Now and Hope for Homeowners, and 
mortgages restructured under this Act; (4) the number of appeals in 
cases where mortgages were restructured under this Act; (5) the number 
of such appeals where the bankruptcy court's decision was overturned; 
and (6) the number of bankruptcy judges disciplined as a result of 
actions taken to restructure mortgages under this Act. In addition, the 
report must include a recommendation as to whether such amendments 
should be amended to include a sunset clause.
  Section 110. Report to Congress. Not later than 18 months after the 
date of enactment of this Act, the Government Accountability Office, in 
consultation with the Federal Housing Administration, must submit to 
Congress a report containing: (1) a comprehensive review of the effects 
of the Act's amendments on bankruptcy courts; (2) a survey of whether 
the types of homeowners eligible for the program should be limited; and 
(3) a recommendation on whether such amendments should remain in 
     effect.


                       Title III--Mortgage Fraud

       Section 301. Short Title. Section 301 sets forth the short 
     title of title III as the Nationwide Mortgage Fraud Task 
     Force Act of 2009.
       Section 302. Nationwide Mortgage Fraud Task Force. 
     Subsection (a) establishes a nationwide mortgage fraud task 
     force within the Justice Department to address mortgage fraud 
     in the United States. Subsection (b) mandates that the 
     Attorney General must provide the task force with appropriate 
     staff, administrative support, and other resources necessary 
     so that the task force can carry out its duties. Subsection 
     (c) requires the Attorney General to appoint one staff member 
     to be the executive director of the task force who, in turn, 
     will ensure that the task force carries out its duties. 
     Subsection (d) requires the task force to establish, oversee, 
     and direct branches in each of the ten states determined by 
     the Attorney General to have the highest concentration of 
     mortgage fraud. Subsection (e) requires the task force to 
     coordinate with federal, state and local law enforcement to 
     establish mortgage fraud initiatives; provide training; and 
     collect and disseminate data. Subsection (f), among other 
     matters, authorizes the task force to establish a toll-free 
     hotline for reporting mortgage fraud; provide the public with 
     access to information and resources with respect to mortgage 
     fraud; establish a data base; and make legislative proposals. 
     Subsection (g), for purposes of this provision, defines 
     mortgage fraud as a material misstatement, misrepresentation 
     or omission relating to the property or potential mortgage 
     relied on by an underwriter or lender to fund, purchase, or 
     insure a loan.


              Title IV--Foreclosure Moratorium Provisions

       Section 401. Sense of the Congress on Foreclosures. 
     Subsection (a) expresses a sense of the Congress that 
     mortgage holders, institutions, and mortgage servicers should 
     not initiate a foreclosure proceeding or sale until the 
     foreclosure mitigation provisions, such as Hope for 
     Homeowners Program and the President's Homeowner 
     Affordability and Stability Plan, have been implemented and 
     determined to be operational by the Secretary of the Treasury 
     and the Secretary of Housing and Urban Development. 
     Subsection (b) states that the foreclosure moratorium should 
     apply only for first mortgages secured by the owner's 
     principal dwelling. Subsection (c) provides that if a 
     mortgage holder, institution, or mortgage servicer (to which 
     subsection (a) applies) reaches a loan modification agreement 
     with a homeowner under the auspices of the Federal Housing 
     Administration before any plan referred to in such subsection 
     takes effect, subsection (a) shall cease to apply to such 
     institution as of the effective date of the loan modification 
     agreement. Subsection (d) states that any homeowner for whose 
     benefit any foreclosure proceeding or sale is barred under 
     subsection (a) from being instituted, continued or 
     consummated with respect to any homeowner mortgage should not 
     destroy, damage, or impair such property, allow it to 
     deteriorate, or commit waste on the property. Subsection (e) 
     provides that any homeowner for whose benefit any foreclosure 
     proceeding is barred under subsection (a) from being 
     instituted, continued, or consummated with respect to any 
     homeowner mortgage should respond to reasonable inquiries 
     from a creditor or servicer during the period during which 
     such foreclosure proceeding or sale is barred.

  Mrs. MALONEY. Mr. Chair, I rise today in strong support of H.R. 1106, 
the ``Helping Families Save Their Homes Act.'' This legislation is 
needed now more than ever, and I want to commend Chairman Frank, 
Chairman Conyers, and the Leadership for working together to bring this 
bill to the Floor.
  It is important to remember that behind the economic and housing 
statistics are real people--the hard-working Americans and their 
families who are facing difficulties paying their bills every day. H.R. 
1106 contains several key provisions to ensure that homeowners will 
have more options available to them to stay in their homes.
  The bill before us would make necessary improvements to the Hope for 
Homeowners program including reducing current fees that have 
discouraged lenders from voluntarily participating and offering a 
$1,000 incentive payment to servicers for each successful refinance of 
existing loans. H.R. 1106 will ensure that predatory lenders, who bear 
some of the responsibility for today's housing situation, will not be 
approved as lenders under FHA programs. The legislation also provides a 
safe harbor from liability to mortgage servicers who engage in certain 
loan modifications, and it makes permanent an increase, from $100,000 
to $250,000, in the amount of bank or credit union deposits insured by 
Federal banks and credit union regulators. H.R. 1106 establishes a 5-
year restoration plan for the National Credit Union Administration 
(NCUA) which is currently required to restore the equity ratio of the 
Share Insurance Fund within one year.
  I think most of us agree that bankruptcy should be the option of last 
resort. However, for those homeowners facing bankruptcy, H.R. 1106 will 
allow bankruptcy judges to reduce the principal, extend the repayment 
period, or authorize the reduction of an exorbitant interest rate to a 
level that helps make a mortgage more affordable. I am glad that we 
have been able to make changes to this legislation that will enable 
homeowners to stay in their homes, while at the same time providing 
greater certainty to lenders and to the secondary market.
  I am hopeful that this bill will help to stem the tide of 
foreclosures and ensure that our neighborhoods do not experience a 
cascade of increased vacant lots and decreased property values.
  The President has proposed a plan to help make it easier for 
homeowners, including those who are still in repayment but at risk for 
default, to refinance their mortgages at around the current market 
rate, or modify their loans. H.R. 1106 is an important step in moving 
forward with that plan. We must act now. The American people deserve no 
less than our full commitment to helping them through these troubled 
times.
  I urge my colleagues to support this legislation.
  Ms. ZOE LOFGREN of California. Mr. Chairman, I yield back the balance 
of my time.
  The Acting CHAIR. The question is on the amendment, as modified, 
offered by the gentlewoman from California (Ms. Zoe Lofgren).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Mr. GOODLATTE. Mr. Chairman, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentlewoman from California 
will be postponed.

[[Page H3014]]

            Amendment No. 2 Offered by Mr. Price of Georgia

  The Acting CHAIR. It is now in order to consider amendment No. 2 
printed in House Report 111-21.
  Mr. PRICE of Georgia. Mr. Chairman, I have an amendment made in order 
by the rule.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 2 offered by Mr. Price of Georgia:
       Beginning on page 7, strike line 5 and all that follows 
     through line 16 on page 8, insert the following (and make 
     such technical and conforming changes as may be appropriate):

     days after receiving such proceeds, if such residence is sold 
     after the effective date of the plan, 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.

  The Acting CHAIR. Pursuant to House Resolution 190, the gentleman 
from Georgia (Mr. Price) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Georgia.
  Mr. PRICE of Georgia. Mr. Chairman, at a time when the government is 
going to unprecedented lengths to stabilize the banking system, this 
legislation is short-sighted, untimely, unfair, and counterproductive.
  Now, while some might see cramdown as a quick fix, in reality the 
legislation will have a costly impact on generations to come. Ranking 
Member Smith of the Judiciary Committee sent a thoughtful letter to the 
administration raising concerns about the bill, saying that it would 
lead to, one, significant taxpayer liability for Federal mortgage 
guarantees by redistributing wealth from responsible taxpayers to 
irresponsible borrowers and lenders; two, the hoarding by banks of 
hundreds of billions of dollars in capital, undermining the efforts 
that have been undertaken by the government since September to 
stabilize the financial market; and three, additional constriction in 
the home lending market. This bill punishes those who have lived within 
their means and acted prudently by forcing them to subsidize those who 
made irresponsible choices.
  One of the many problems with this bill is that it doesn't have any 
safeguards to prevent the very people who profited from risky behavior 
and irresponsible choices from further benefiting at taxpayer expense. 
The text of the underlying legislation will allow for a partial payback 
of the cramdown amount if the house is sold within 4 years of the 
modification. The manager's amendment barely changes the language 
already in the bill by extending by 1 year and 10 percent the possible 
partial recapture.
  If a mortgagee sells his or her home 6 years after going through a 
cramdown at a profit, he or she can pocket all of the difference. Mr. 
Chairman, no one should be able to profit off of a bankruptcy 
proceeding. Bankruptcy should not be an opportunity to game the system. 
Hence my amendment.
  The amendment would prevent this from happening by simply saying that 
if a homeowner who has had a mortgage modified in a bankruptcy 
proceeding sells the home at a profit, the lender--the individuals 
originally at risk for the money--may recapture the amount of principal 
lost in the modification or cramdown.
  By putting lenders in a position of hedging against cramdown losses, 
this legislation will raise interest rates for the very individual 
whose tax dollars are paying all of these government bailouts. Some 
suggest that the cramdown may raise interest rates as much as 2 
percentage points. The 92 percent of homeowners who are working to pay 
off their mortgages should not be forced to subsidize the mistakes of 
irresponsible borrowing or lending. By restoring the lender the money 
that is owed them, we will mitigate the amount to which the industry 
will need to raise interest rates on responsible homeowners.
  This bill is yet another ``Joe the plumber'' moment here in this 
Congress, providing for the redistribution of wealth from responsible, 
accountable taxpayers to borrowers and lenders who will not be held 
accountable.

                              {time}  1300

  President Obama has spoken repeatedly of the importance of fairness 
and personal responsibility. This amendment is an important step in 
that direction.
  I urge my colleagues to adopt the amendment, a responsible and simple 
amendment, and reserve the balance of my time.
  Ms. ZOE LOFGREN of California. Mr. Chairman, I must oppose this 
amendment, and I yield myself such time as I may consume.
  The issue it addresses is already addressed in the bill and, again, 
in the manager's amendment. This would take the issue another step 
further, and I will say it's a step too far.
  This would have the effect of making it practically impossible for a 
family to move to pursue another job. Families would not only keep 
their homes, they would be trapped there.
  The bill also leaves no room for a homeowner to reap a windfall, 
either calculated or happenstance, so this amendment is unrequired.
  I would note that the Price amendment would turn homeowners really 
into renters for life. It would remove any incentive for a homeowner 
who needed to sell a house to seek top value in the sale of that house 
or even to keep up appearances on that house.
  It's a mistake, and it's not what the American Dream is all about.
  I reserve the balance of my time.
  Mr. PRICE of Georgia. May I inquire as to the time remaining?
  The Acting CHAIR. The gentleman from Georgia has 2 minutes and the 
gentlelady from California has 4 minutes.
  Mr. PRICE of Georgia. I am pleased to yield to my friend from 
Virginia (Mr. Goodlatte) 1 minute.
  Mr. GOODLATTE. I thank the gentleman for yielding me the time, and I 
am pleased to support his amendment, which addresses a serious problem 
that's in the underlying bill that is not corrected by the manager's 
amendment, and that is that the cramdown bill will reduce the incentive 
for many solvent borrowers to keep making payments on their mortgages.
  While there are 3 million borrowers who are 60 days or more 
delinquent on their mortgages, 52 million borrowers remain current in 
their payments. The cramdown bill gives struggling, but still solvent, 
borrowers a powerful incentive to stop paying off their mortgages, 
trigger foreclosure notices and go into bankruptcy to cramdown their 
mortgage principal and restructure or eliminate all of their other 
debts.
  We will have an outright catastrophe on our hands if most borrowers 
get the idea that they can successfully game the bankruptcy system in 
this way. The gentleman's amendment would correct this problem and make 
sure that we don't have a run on the bankruptcy courts of great 
magnitude by creating what is currently in the bill now, an incentive 
to file bankruptcy if the value of your mortgage is greater than the 
value of your home.

   The Four Worst Things About the Mortgage Cramdown Bill (H.R. 200)

       No. 1: Back to the Financial Meltdown--The cramdown bill 
     seriously threatens to send us through a time warp straight 
     back to the September financial meltdown. Write-downs of 
     mortgages in bankruptcy will inexorably force downgrades of 
     mortgage-backed securities based on those mortgages. The 
     downgrades will in turn force banks and insurance companies 
     on the hook for the securities to boost their capital 
     reserves. (For example, if a AAA-rated security is downgraded 
     to a BB rating, a bank or insurance company will have to hold 
     10-times the capital reserves.) The resulting hoarding of 
     capital could total hundreds of billions of dollars, freeze 
     lending, kill many already wounded banks, and send us 
     straight back to the brink we faced in September 2008. This 
     could precipitate another bank bailout to the tune of 
     hundreds of billions of dollars, and it will undermine 
     everything we yet have done to stem the financial crisis.
       No. 2: Moral Hazard--The cramdown bill will reduce the 
     incentive for many solvent borrowers to keep making payments 
     on their mortgages. While 3 million borrowers are 60 days or 
     more delinquent on their mortgages, 52 million borrowers 
     remain current in their payments. The cramdown bill gives 
     struggling but still solvent borrowers a powerful incentive 
     to stop paying off their mortgages, trigger foreclosure 
     notices, and go into bankruptcy to cram down their mortgage 
     principal and restructure or eliminate all of their other 
     debts. We will have an outright catastrophe on our hands if 
     most borrowers get the idea that they can successfully game 
     the bankruptcy system in this way.

[[Page H3015]]

       No. 3: Higher Interest Rates and Down Payment 
     Requirements--Including for the Innocent and the Risky 
     Borrowers Most in Need--The cramdown bill is not the last 
     step. It is the key step in the Democratic Congress' walk-up 
     to its long-sought repeal of the primary residence mortgage 
     exception from the Bankruptcy Code. Once the primary 
     residence exception is gone, lenders' greatly increased risk 
     will surely lead to higher interest rates, higher down 
     payment requirements, and other, tighter terms of principal 
     residence mortgages. This will especially hurt already risky, 
     lower-income borrowers, anyone who needs to refinance out of 
     a challenging mortgage, and everyone who responsibly waited 
     on the home-buying sidelines until the housing bubble burst. 
     In fact, once the first, very big step is taken through the 
     cramdown bill, lenders would be foolish not to begin pricing 
     in their likely increased risk right away. So what's the 
     result of the cramdown bill? Nothing more than swapping the 
     victims.
       No. 4: We Still Have Better Options We Can Try--Backers of 
     the cramdown bill say we've tried everything else to stem the 
     foreclosure crisis, and nothing else has worked. That's 
     nonsense. The most recent voluntary programs are working 
     better, and top-flight academics have proposed a terrific 
     solution to get at the mortgages we still haven't been able 
     to reach--mortgages served by third-party servicers that 
     don't own the loans. These servicers lack sufficient 
     incentive to seek loan modifications rather than to 
     foreclose. What is more, if they do modify loans, they can be 
     sued by mortgage-backed securities investors. Still on the 
     table is a proposal to fix this problem by giving third-party 
     servicers a small, per-loan incentive out of TARP funds, and 
     cutting off litigation risk by overriding problem contract 
     clauses and affording a litigation safe-harbor. This proposal 
     appears to be the best possible solution for the critical 
     mass of the remaining problem loans. It will cost little more 
     than $10 billion in TARP funds. Why on earth would we risk 
     the parade of horribles and hundreds of billions of dollars 
     of downside risk threatened by the cramdown bill, when we 
     still haven't tried other, better options.

  Ms. ZOE LOFGREN of California. I would yield to the gentleman from 
Georgia (Mr. Marshall) 1 minute.
  Mr. MARSHALL. Mr. Chairman, in response to the motion, I understand 
that the gentleman from Georgia is opposed to the bill. In effect, the 
gentleman's amendment, proposed amendment, would simply gut the bill. 
People would not take advantage of this relief.
  I am not somebody who is interested in taking taxpayer dollars and 
injecting the taxpayer dollars into a bad deal, either to help out the 
lender or help out the borrower. I am somebody who is interested, for 
the sake of our lenders, and all of our homeowners, in seeing the 
number of vacancies diminish, not increase, in finding some sort of 
bottom to home values. Now, this bill does that.
  It also, and I was largely the author of this, it also provides that 
there is a claw-back provision where equity is concerned. The borrower 
has incentives to take care of the property to improve the property 
because, gradually, the borrower acquires equity in the property. But 
initially the borrower does not have equity in the property following 
cramdown.
  What this bill provides is that if a borrower defaults hard on the 
heels of cramdown, 100 percent of the value, upside value, goes to the 
lender.
  The Acting CHAIR. The time of the gentleman has expired.
  Ms. ZOE LOFGREN of California. I would yield the gentleman an 
additional 15 seconds.
  Mr. MARSHALL. One hundred percent of the upside goes to the lender, 
and then gradually the borrower, by performing appropriately, obtains 
equity in the property.
  It's a reasonable balance here. The balance could have been struck 
some other way. In effect, the lender continues to have an interest and 
the balance is appropriate--does not go so far as the gentleman's 
suggestion goes, because the gentleman's suggestion would essentially 
kill the bill and continue these vacancies that are hurting all of us.
  Mr. PRICE of Georgia. I will continue to reserve.
  Ms. ZOE LOFGREN of California. I believe I have the right to close, 
do I not? Does the gentleman have additional speakers?
  Mr. PRICE of Georgia. I don't; do you?
  Ms. ZOE LOFGREN of California. No, we don't.
  Mr. PRICE of Georgia. Mr. Chairman, this is a very simple amendment. 
What it says is that if a bank loans an individual $150,000 to purchase 
a home, and that is subject to a bankruptcy provision and a cramdown, 
and a judge says that principal will only be $100,000, and that 
individual who owns the home then sells it at a future date, more than 
5 years, for somewhere between $100,000 and $150,000, then that amount 
of money goes to the lender, the individuals that were individually at 
risk for the money, loaned the money. If it was over $150,000, then the 
old homeowner is able to pocket that profit appropriately.
  It's a very simple provision. It's a provision, an amendment of 
fairness, of simplicity. It doesn't gut the bill. In fact, what it does 
is actually makes the system fair and responsible and rewards 
responsible activity.
  I urge my colleagues to support a commonsense, responsible amendment 
and yield back the balance of my time.
  Ms. ZOE LOFGREN of California. Mr. Chairman, this amendment would 
enrich lenders and really gut the bill, damage communities and damage 
home values. In the bill there is a responsible provision for lenders 
who have had their mortgages adjusted in chapter 13 to recover on a 
graduated basis, should property values appreciate at sale. What this 
amendment would do would be to turn homeowners into renters for life.
  I will just point out something else. In bankruptcy law, if you are a 
speculator, you go in and you buy three condominiums on spec, and you 
hope you are going to make a fortune on it. But, instead, the market 
turns. You go into chapter 13, you can get the principal written down, 
you can get the interest written down but the homeowner in a condo 
cannot.
  I would point out that if condo values rise, the speculator under the 
Price amendment gets all the value, the lender gets none. Only the 
homeowner would be made a renter for life. Now, how is that fair in 
America, a country that's looking for fairness?
  I would like to note that currently, if a lender forecloses on a 
home, it receives none of the home's appreciation. So what is in the 
manager's amendment, the balanced amendment--I want to credit Mr. 
Marshall for his excellent work in putting this in--is a vast 
improvement over current bankruptcy law as it relates to homeowners.
  Now, why is this important? Lenders benefit by getting part of their 
appreciated value and by savings on foreclosure costs. Homeowners share 
in the value of their home's increasing value, and that's the American 
Dream.
  I would note also that it provides incentives for homeowners who have 
gone through the tragic circumstance of losing so much and reorganizing 
in chapter 13 and the stigma that that entails. It provides them 
incentive to continue to keep up their properties, to paint their 
houses and to keep up appearances because they have a stake in the 
future as well, it's not just some remote bank.
  Finally, communities benefit because homeowners have this incentive 
to maintain their properties. So it's important that this measure 
proceed. As I mentioned earlier, the Price amendment would basically 
gut this bill and that would be a mistake.
  With 6 million homeowners facing foreclosure, that is a disaster not 
just for those 6 million but for their neighbors. I have seen areas in 
our country where half the houses are in foreclosure, and I will tell 
you, it's a nightmare for everyone in that community. The meth dealers 
move in, the property values decline.
  Reject the Price amendment.
  Mr. SHERMAN. Mr. Chair, the Price amendment to H.R. 1106 fails to 
deal appropriately with post-bankruptcy improvements made by the 
homeowner.
  The Acting CHAIR. All time for debate has expired.
  The question is on the amendment offered by the gentleman from 
Georgia (Mr. Price).
  The question was taken; and the Acting Chair announced that the noes 
appeared to have it.
  Mr. PRICE of Georgia. Mr. Chairman, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Georgia will 
be postponed.


                 Amendment No. 3 Offered by Mr. Peters

  The Acting CHAIR. It is now in order to consider amendment No. 3 
printed in House Report 111-21.
  Mr. PETERS. I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.

[[Page H3016]]

  The text of the amendment is as follows:

       Amendment No. 3 offered by Mr. Peters:
       Beginning on page 3, strike line 21 and all that follows 
     through line 2 on page 4, insert 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.''.

  The Acting CHAIR. Pursuant to House Resolution 190, the gentleman 
from Michigan (Mr. Peters) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Michigan.
  Mr. PETERS. Mr. Chairman, I would like to yield myself such time as I 
may consume.
  Today we are considering some important legislation that is going to 
provide borrowers, lenders and the government with a number of very 
important tools to address the housing and foreclosure crisis in this 
country. Much of the focus of this debate has been on the bankruptcy 
reform portion, which is also the focus of the amendment on the floor 
right now.
  Under current law, those filing for bankruptcy must receive 
counseling services from an improved credit counseling agency during 
the 180-day period before the bankruptcy filing. H.R. 1106 eliminates 
the counseling requirement for those who have already received a 
foreclosure notice because of a concern that the requirement would be a 
procedural burden for those who file for bankruptcy quickly in order to 
save their homes.
  The Peters' amendment would preserve the requirement for credit 
counseling but would allow those who have received a foreclosure notice 
to file for bankruptcy so long as they obtained the required credit 
counseling within 30 days after the bankruptcy filing.
  This will ensure that everyone who enters the bankruptcy process will 
continue to receive this very important service, but it also makes 
clear that no one will lose their home because they could not get 
access to counseling on time.
  Credit counseling is an incredibly important service. In some cases 
the independent credit counselors can review a debtor's finances and 
recommend options other than bankruptcy that may be appropriate. It 
should always be our goal to keep people out of bankruptcy whenever 
possible.
  In every case, however, credit counselors can provide important tools 
for budgeting that will help the debtor adjust to living under the 
kinds of financial restrictions that bankruptcy requires.
  Mr. Chairman, I urge my colleagues to support this amendment, and I 
reserve the balance of my time.
  Mr. GOODLATTE. Mr. Chairman, I rise to claim the time in opposition 
to the amendment, even though I am not opposed to the amendment.
  The Acting CHAIR. Is there objection to the request of the gentleman 
from Virginia?
  There was no objection.
  Mr. GOODLATTE. Mr. Chairman, I yield myself such time as I may 
consume.
  The amendment seeks partially to reinstate a credit counseling 
requirement for chapter 13 bankruptcy petitioners that H.R. 1106 will 
strip entirely away. There is no good reason to wipe out the credit 
counseling requirement for debtors facing foreclosure.
  Bankruptcy credit counseling benefits consumers by providing the 
financial education needed to emerge successfully from bankruptcy. 
Homeowners facing foreclosure are ideal candidates for credit 
counseling. This is not always because they can avoid bankruptcy.
  It is often so that they can get help to increase their prospects of 
being successful after bankruptcy. The vast majority of Americans who 
receive credit counseling believe strongly that it benefits them.
  Finally, credit counseling offers one last real opportunity for a 
homeowner to reach out to a lender and determine whether a loan 
modification is possible. A majority claims that many borrowers were 
hoodwinked into obtaining their loans. That's largely why the majority 
wants homeowners to be able to take their loans into bankruptcy.
  But if credit counseling might show homeowners a better option than 
bankruptcy, why not let them try counseling. The amendment we are 
considering does not go far enough. It does not fully restore the 
requirement for counseling that is in current law.
  The Rules Committee should have made Mr. Forbes' credit counseling 
amendment in order. That amendment would fully restore the counseling 
requirement and ensure that borrowers receive counseling before they 
file for bankruptcy.
  However, because the amendment before us does restore at least a 
limited requirement for counseling, I support it.
  I reserve the balance of my time.
  Mr. PETERS. I would like to yield to the gentlewoman from California 
(Ms. Zoe Lofgren) for 1 minute.
  Ms. ZOE LOFGREN of California. Mr. Chairman, I rise to support this 
amendment offered by my colleague from Michigan (Mr. Peters).
  It was a pleasure to work with him to reach agreement on his 
amendment, and I appreciate his commitment to ensuring that Americans 
have credit counseling under the Bankruptcy Code, especially in these 
difficult economic times.
  His amendment, Mr. Peters' amendment, ensures that homeowners will be 
able to meet their obligations, to obtain credit counseling without 
risking foreclosure. It strikes the right balance, and it shows real 
foresight, judgment and skill on Mr. Peters' part, and I appreciate 
supporting his amendment, and I appreciate his presence here in our 
body.
  Mr. GOODLATTE. Mr. Chairman, may I ask how much time is remaining on 
each side?
  The Acting CHAIR. There are 3\1/2\ minutes for the gentleman from 
Virginia and 2 minutes for the gentleman from Michigan.

                              {time}  1315

  Mr. GOODLATTE. Mr. Chairman, I yield such time as he may consume to 
the gentleman from Texas (Mr. Gohmert).
  Mr. GOHMERT. Mr. Chairman, the crisis that we're in right now had a 
number of factors that helped create it. One, we had investment bankers 
on Wall Street that got a little too greedy. Congress forced banks to 
make some loans that they shouldn't have made.
  But throughout all this process, community banks, generally speaking, 
by and large, have done a great job of staying stable even through the 
toughest of times. But we keep rewarding greed and improper conduct and 
then keep hurting the people who have done the most good.
  Now, I understand the hearts of those on the other side that are 
pushing this, and I understand that my colleagues feel like it's going 
to help. But the fact is you talk to the community banks who have 
really been hurt, starting with Paulson's screaming that we'll take 
care of dollar for dollar of every dime in money market accounts but 
banks are only covered to $100,000. People withdrew their money from 
the banks. They still survived and they're doing well.
  But you've got to look at what banks are required to do. They're 
required to be solvent. And that means on the asset side, they have to 
show a net plus. And if we pass this, then that net plus will be an 
uncertainty. They will not know what they have because we'll have a 
bankruptcy judge who can come in and just at his whim change the 
principal on a mortgage. And I see my colleague shaking her head. A 
bankruptcy judge will be able to lower the principal. That's what this 
is about, and that is going to be creating such uncertainty in the 
banks.
  And here at a time when we have just in 2 months added what will 
ultimately be more taxes to the next generation and the generation 
after that than they could possibly pay, now if this passes, those 
banks will have to be so sure that people will not file bankruptcy, 
they're going to need to have a good credit history for 10, 15 years, 
20 years. So not only are we adding all this tax burden to them, we're 
also telling

[[Page H3017]]

them, and, by the way, you're not going to be able to get a home loan 
for years to come until you have such a great track record that a bank 
can be certain you won't file bankruptcy because otherwise their bank 
financial statement will be uncertain.
  We've done enough damage to the next generations. It's time to stop 
hurting the next generations. Let's take care of this with our 
generation. Let's not reward problem activity. Let's let the community 
banks survive this process without hurting them any worse.
  Mr. PETERS. Mr. Chairman, I do not have any further requests for 
time, and I reserve the balance of my time.
  Mr. GOODLATTE. Mr. Chairman, may I ask how much time is remaining?
  The Acting CHAIR. The gentleman from Virginia has 30 seconds 
remaining.
  Mr. GOODLATTE. Mr. Chairman, let me take the 30 seconds to say that 
while I think this is a good amendment and I support it, it doesn't go 
as far as it should have. We should have had the opportunity to vote 
today and debate today the amendment offered by Congressman Forbes from 
Virginia. But nonetheless, that not being the case, I support this 
amendment.
  But I still strongly oppose this underlying legislation, which is 
going to cause hardships for future homeowners who are going to wind up 
paying higher mortgage rates and larger down payments for the problems 
that exist today. That's wrong. We should not pass that and spread that 
risk to those people, and we should not jeopardize legitimate credit 
unions and community banks that have been doing so much to help extend 
credit in this country.
  Mr. PETERS. Mr. Chairman, my amendment is a commonsense compromise 
that ensures that everyone who enters into the bankruptcy process will 
continue to get important credit counseling services, while at the same 
time giving those who do not have the time to complete the counseling 
and are in danger of losing their home the opportunity to do so after 
they have filed for bankruptcy. The amendment is supported by the 
Financial Counseling Research Roundtable, which is comprised of the 
Nation's leading nonprofit organizations providing Americans with 
bankruptcy, housing, consumer credit, and financial counseling.
  I'd also like to take this opportunity to thank Chairman Conyers for 
working with me on this amendment and for his leadership in helping to 
put together this package.
  Mr. Chairman, I yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Michigan (Mr. Peters).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Mr. GOODLATTE. Mr. Chairman, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Michigan 
will be postponed.


                  Amendment No. 4 Offered by Ms. Titus

  The Acting CHAIR. It is now in order to consider amendment No. 4 
printed in House Report 111-21.
  Ms. TITUS. Mr. Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 4 offered by Ms. Titus:
       Page 34, strike line 13, and insert the following:
       ``(x) Payment to Existing Loan Servicers.--
       ``(1) Payment.--The''.
       Page 34, after line 17, insert the following:
       ``(2) Notification requirement.--The Secretary shall 
     require each servicer that receives a payment under this 
     paragraph to notify all mortgagors under mortgages serviced 
     by such servicer who are at-risk homeowners (as such term is 
     defined by the Secretary), in a form and manner as shall be 
     prescribed by the Secretary, that they may be eligible for 
     the HOPE for Homeowners Program under this section and how to 
     obtain information regarding the program.''.

  The Acting CHAIR. Pursuant to House Resolution 190, the gentlewoman 
from Nevada (Ms. Titus) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentlewoman from Nevada.
  Ms. TITUS. Mr. Chairman, I rise today with an amendment to H.R. 1106, 
the Helping Families Save Their Homes Act.
  As you know, the foreclosure crisis is wreaking havoc across the 
entire Nation, but my district in Southern Nevada is particularly hard 
hit. Nevada has the highest foreclosure rate in the country. Home 
prices have dropped significantly. Thousands of families are upside-
down on their mortgages, and foreclosures are extending into the prime 
market. In fact, there was a report that was issued today by the First 
American CoreLogic group that stated there were 58.2 percent of Las 
Vegas houses upside-down and another 3.5 percent that are fast 
approaching that for a total of 61.7 percent of all outstanding 
mortgages. Compounding the problem even further, the unemployment rate 
in Nevada is over 9 percent, well above the national average. Families 
who are responsible and bought a home within their means are now facing 
foreclosure due to loss of a job or reduction of hours at work.
  Foreclosure prevention, I believe, is a critical part of any strategy 
to get us back on track. I strongly believe that aggressive outreach to 
borrowers can help prevent unnecessary foreclosures, and that is 
exactly what my amendment seeks to address.
  The amendment is simple and straightforward. In short, it would 
require that servicers who participate in the HOPE for Homeowners 
Program and receive government incentives paid for by taxpayer dollars 
notify at-risk homeowners that they may be eligible for the program and 
tell them how to obtain information regarding the program. It also 
requires that the HUD Secretary define who are at-risk homeowners and 
prescribe a form and manner of notifying them of their potential 
eligibility for assistance.
  By requiring HUD to define what is meant by ``at risk'' and to 
prescribe the method of notification of eligible homeowners, my 
amendment attempts to limit the administrative burden on the servicers. 
At the same time, it ensures that homeowners who are in danger of 
losing their homes and may be eligible for help will receive as much 
information as possible about the HOPE for Homeowners Program. Many 
people in trouble do not even know what help is available to them, and 
this amendment will help resolve that problem so they can find out 
about HOPE for Homeowners in a timely fashion before it's too late. I 
cannot tell you how many calls I have received from constituents in my 
district office who are facing foreclosure and don't know where to 
turn. This amendment will provide them with the information and help 
they need under this very important legislation.
  Mr. Chairman, I have discussed this issue with Chairman Frank of the 
Financial Services Committee and understand that he has some 
reservations regarding the scope of the amendment. He intended to be 
here but was delayed by a press conference. Although I intend to 
withdraw the amendment, I think it's important that we have the 
discussion on this issue today, and I appreciate your indulgence. I 
also look forward to working with Chairman Frank as we move forward to 
improve notification requirements and address the foreclosure crisis in 
our country.
  Mr. Chairman, I reserve the balance of my time.
  Mrs. CAPITO. Mr. Chairman, I rise to claim the time in opposition; 
although I'm not opposed to the gentlewoman's amendment.
  The Acting CHAIR. Without objection, the gentlewoman is recognized 
for 5 minutes.
  There was no objection.
  Mrs. CAPITO. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I am not in opposition to the gentlewoman's amendment, 
but I do want to talk about my opposition to the underlying package 
before the House today.
  Our Nation is facing significant challenges, especially in the 
mortgage market. We once had a flowing market providing the funds 
critical to the origination of mortgages to our home buyers.
  One of the proposals before us today is to allow judges to alter the 
terms of a mortgage product in bankruptcy. I really understand the 
desire to help families avoid foreclosure and agree that we should do 
everything we can to help them. However, this solution to helping 
should not adversely affect the

[[Page H3018]]

overwhelming majority of the population that are tightening their 
family budgets to continue paying their mortgages on time. Passage of 
this legislation in its current form could send mortgage rate fees 
higher for our regular homeowners as creditors pass on the risk of 
bankruptcy procedures. This is a question of fairness, in my mind. We 
must be certain that in the pursuit of helping those who deserve help 
and need help that we do not unduly burden those who have worked hard 
to keep their heads above water.
  I also have concerns about the state of the HOPE for Homeowners 
Program. During a recent hearing in our Financial Services Committee, 
one of the witnesses from the Department of Housing and Urban 
Development agreed with me when I posited the question: Should we just 
scrap this and start over? Realizing that as of today, HOPE for 
Homeowners, which has been in effect for several months now, has only 
helped 50 homeowners in their current situation. I offered an 
amendment, and I feel that we should give the FHA new authority to 
reshape this program where it can really work quickly and is targeted 
to the population who desperately need this help. I offered an 
amendment to the Rules Committee to achieve this goal, but I was 
prevented from offering it on the floor and am, therefore, prevented 
from discussing it on the floor in a fuller manner. So later today I 
will be introducing that proposal as stand-alone legislation, the REFI 
for Homeowners Act.
  There are some provisions in this bill that I do support, like the 
safe harbor provisions that will encourage more modifications, the 
increasing of deposit insurance for FDIC and NCUA, and the ultimate 
goal of this bill, which is to help homeowners. However, the cramdown 
of mortgages and the continuation of the HOPE for Homeowners Program 
that is not working is not in the best interest of our taxpayers. I 
think we can do better than what this bill offers.
  Mr. Chair, I reserve the balance of my time.
  Ms. TITUS. Mr. Chairman, I yield such time as he may consume to 
Chairman Frank.
  Mr. FRANK of Massachusetts. I thank the gentlewoman for yielding.
  Mr. Chair, I think her amendment is a very important one. I would ask 
her if we could withhold further action to do a little work on it 
because the notion that we should put a requirement on these servicers 
to get funding is a valid one. There are some interconnections here, 
and I think we could actually make it apply to more people. But, also, 
if a servicer is only doing two or three of these, the requirement that 
they notify everybody might become a deterrent to doing some. So I 
would like to sharpen it and broaden it at the same time. And if the 
gentlewoman would agree, we could work on this, and I think by the time 
this gets through the Senate, never known for breakneck speed, we would 
have a version that would improve it. So I would suggest that to the 
gentlewoman.
  Mrs. CAPITO. Mr. Chairman, I yield 45 seconds to the gentleman from 
Texas (Mr. Culberson).
  Mr. CULBERSON. Mr. Chair, we fiscal conservatives are in the 
minority, unfortunately, and have been working hard to lay out 
alternatives to stimulate the economy with immediate tax cuts, with 
spending cuts.
  The new majority in Congress, with this new President, has spent more 
money in less time than any Congress in history. In fact, that's all 
borrowed money. About $1.3 trillion in borrowed money has already been 
spent by this Congress.
  I would like to ask the Congresswoman from Nevada (Ms. Titus), who 
ran on a record of being fiscally responsible, Ms. Titus, how is it 
fiscally responsible that you voted for $1.2 trillion in new spending, 
borrowed money, which is going to be paid for by our children and 
grandchildren? How is that fiscally responsible?

                              {time}  1330

  Ms. ZOE LOFGREN of California. Mr. Chairman, that is not a germane 
point. I would raise a point of order.
  The Acting CHAIR. The gentleman's time has expired.
  Ms. TITUS. Mr. Chairman, I would just like to comment on Chairman 
Frank's offer to help work on this amendment in terms of both its scope 
and depth. I appreciate that offer of assistance. I think we can 
improve the amendment. I think it is very important that we have an 
aggressive borrower outreach program so people who are in trouble can 
find out about the help that is available to them and find that out 
before it is too late.
  Mr. Chairman, I would ask unanimous consent that the amendment be 
withdrawn.
  The Acting CHAIR. Without objection, the amendment is withdrawn.
  There was no objection.
  Mrs. CAPITO. Mr. Chairman, I have time remaining; is that correct?
  I reserve the right to object.
  The Acting CHAIR. The gentlewoman could have reserved the right to 
object before the amendment was withdrawn, but the amendment has been 
withdrawn.
  Mr. FRANK of Massachusetts. Mr. Chairman, it was not our intention to 
shut off the gentlewoman from West Virginia. Is it in order to ask 
unanimous consent that she be allowed the remaining time as if it had 
not been withdrawn?
  The Acting CHAIR. Yes, it is.
  Mr. FRANK of Massachusetts. Then I would make a unanimous consent 
request that the gentlewoman from West Virginia be able to conclude her 
remarks as if the amendment had not been withdrawn.
  The Acting CHAIR. Without objection, the gentlewoman from West 
Virginia reclaims the balance of her time.
  There was no objection.
  Mrs. CAPITO. I thank the chairman for the unanimous consent request.
  I yield the time I have remaining to the gentleman from Indiana (Mr. 
Burton).
  Mr. BURTON of Indiana. You know, one of the things that concerns me 
is that we have spent trillions of dollars in the last few weeks, 
trillions. The people of this country were very concerned about the 
money they had in the banks so the Federal Deposit Insurance 
Corporation raised the amount of money from $100,000 to $250,000 so 
people will feel secure, they will know their money is safe in the 
banks. Yet today, the head of the FDIC, Sheila Bair, said the fund 
could become insolvent this year.
  That is the craziest thing this woman could possibly say. If she 
wants to avoid a run on the banks and scaring the American people to 
death, she shouldn't be making these kinds of comments. To say that the 
FDIC is not going to insure the deposits of the people of this country 
is insane, especially at a time when everybody in this country is 
scared to death.
  Ms. ZOE LOFGREN of California. Mr. Chairman, I move that the 
Committee do now rise.
  The motion was agreed to.
  Accordingly, the Committee rose; and the Speaker pro tempore (Ms. 
Titus) having assumed the chair, Mr. Salazar, Acting Chair of the 
Committee of the Whole House on the state of the Union, reported that 
that Committee, having had under consideration the bill (H.R. 1106) to 
prevent mortgage foreclosures and enhance mortgage credit availability, 
had come to no resolution thereon.

                          ____________________