[Congressional Record Volume 157, Number 31 (Thursday, March 3, 2011)]
[Senate]
[Pages S1232-S1235]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REED (for himself, Mr. Durbin, Mr. Merkley, Mr. 
        Whitehouse, Mr. Franken, and Mr. Leahy):
  S. 489. A bill to require certain mortgagees to evaluate loans for 
modifications, to establish a grant program for State and local 
government mediation programs, and for other purposes; to the Committee 
on Banking, Housing, and Urban Affairs.
  Mr. REED. Mr. President, today I am introducing the Preserving Homes 
and Communities Act. I introduced an earlier version of this 
legislation in 2009. I am pleased to again be joined by Senators 
Durbin, Leahy, Merkley, Whitehouse, and Franken as cosponsors of this 
bill.
  The sheer number of foreclosures across the country is startling. 
Since the beginning of 2009, there have been approximately 5 million 
foreclosures, and the Center for Responsible Lending estimates there 
will be a total of 9 million foreclosures between 2009 and 2012. In my 
home state of Rhode Island, the numbers are similarly shocking because 
1 in every 10 mortgaged homeowners is in foreclosure or seriously 
delinquent on their mortgage payment.
  Rhode Island families have felt the effects of the recession and the 
national housing crisis harder than most, which is why I worked with 
the Obama Administration and led the effort to expand the Hardest Hit 
Fund to include Rhode Island. This program is just getting underway, 
and my hope is that it will provide much needed targeted assistance to 
struggling homeowners and expand the number of loss mitigation tools in 
order to prevent more Rhode Islanders from falling into foreclosure.
  Unfortunately, additional efforts are needed because the foreclosure 
crisis has grown in complexity as a result of the revelations last fall 
pointing to poorly handled, if not illegal, foreclosure processing. 
Cutting these corners at the risk of severe legal consequences raises 
serious questions about not only the value of mortgage related 
investments, but also the loan modification efforts of servicers.
  I will persist in my efforts to fight improper foreclosures and to 
bring Rhode Islanders the relief they deserve, and this commitment 
continues today with the introduction of the Preserving Homes and 
Communities Act. This bill has been updated and enhanced from its 
predecessor in the last Congress to reflect the fact that some 
provisions have been enacted into law and to address emerging issues 
that are standing in the way of saving as many homes as possible.
  Most importantly, this bill, like the one I introduced in 2009, 
eliminates the so called ``dual-track'' in which a homeowner is 
evaluated for a home loan modification while simultaneously being 
foreclosed upon. The prospect of losing one's home is daunting enough, 
and unfortunately, too many troubled homeowners have received a 
modification notice one day followed by a foreclosure notice the next 
day. This is just too confusing and injects additional uncertainty at 
the most unnerving time for a troubled homeowner. Simply put, there 
should be no dual track. There should be one track, and while a 
troubled homeowner is being evaluated for a loan modification, they 
should have the comfort of knowing that foreclosure proceedings will 
not be initiated. This bill establishes this single track.
  Second, in light of the repeated difficulties that troubled 
homeowners have faced in contacting and remaining in touch with their 
servicers, this bill continues to provide a means for more State and 
local governments to establish mediation programs. These programs 
provide a process by which a neutral third party presides over 
discussions between homeowners and servicers to review and discuss 
alternatives to foreclosure.
  Third, with this bill, I continue my efforts to fund the National 
Housing Trust Fund, which would enable the building, preservation, and 
rehabilitation of affordable rental housing through the proceeds 
received from the warrant provisions I crafted for the financial rescue 
package in 2008. These warrant provisions ensured that as banking 
institutions recovered from their near collapse, American taxpayers, 
who bankrolled their recovery, would also benefit from the upside. To 
date, more than $8 billion in warrant proceeds have been recouped by 
taxpayers. As I have stated before, my view is that some of these 
returns from providing a firmer foundation for our financial 
institutions would be put to good use by providing a firmer foundation 
for affordable rental housing in our country by finally funding the 
National Housing Trust Fund.
  This bill also has several new provisions. First, in response to 
repeated concerns that the loan modification process has been lacking 
in transparency, this bill creates a dispute resolution mechanism 
within the loan modification process itself. Under this bill, troubled 
homeowners and servicers may work out their disagreements with a 
neutral third party on a fair playing field with all the information 
required to evaluate whether a home loan modification application was 
properly evaluated.
  Second, this legislation addresses the recent robo-signing 
allegations by requiring servicers, if a home loan modification is 
denied, to prove that they actually have the legal right to foreclose.
  Third, this bill responds to difficulties faced by individuals who, 
for example, have come to own and live in a mortgaged home through the 
death of a loved one. These unfortunate life events are tough enough. 
As long as these individuals live in these homes as

[[Page S1233]]

their primary residences and are having difficulties paying their 
mortgages due to financial hardship, they too would have to be 
evaluated for a loan modification before banks could foreclose under my 
legislation.
  Fourth, this bill adds another provision to the section placing 
reasonable limits on foreclosure fees and costly markups by prohibiting 
abusive fees charged in response to lapsed home insurance policies. 
Under this bill, when a home insurance policy lapses, the servicer may 
only charge a fee in an amount equal to the cost of continuing or re-
establishing the home insurance policy. No more, and no less.
  Lastly, I think it's important to make one final point about this 
bill. It provides the means for servicers to legitimately evaluate 
struggling homeowners for loan modifications, but it does not require 
servicers to work with homeowners who have clearly abandoned their 
homes, as determined by the Secretary of Housing and Urban Development. 
This bill is narrowly and responsibly tailored to prevent foreclosures 
that can be avoided and to ensure that all finalized foreclosures are 
properly and objectively processed. In short, this legislation is fair.
  The foreclosure crisis has persisted for far too long, and it is time 
to finally address this issue once and for all. The Preserving Homes 
and Communities Act provides a path to stabilizing the housing sector 
as a means of bolstering and sustaining our economic recovery. I hope 
my colleagues will join me and Senators Durbin, Leahy, Merkley, 
Whitehouse, and Franken in supporting this bill and taking the 
legislative steps necessary to address foreclosures.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 489

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Preserving Homes and 
     Communities Act of 2011''.

     SEC. 2. DEFINITION.

       In this Act, the term ``Secretary'' means the Secretary of 
     Housing and Urban Development.

     SEC. 3. LOAN MODIFICATION REQUIREMENTS.

       (a) Definitions.--In this section--
       (1) the term ``covered mortgagee'' means--
       (A) an original lender under a federally related mortgage 
     loan;
       (B) any servicer, affiliate, agent, subsidiary, successor, 
     or assignee of a lender under a federally related mortgage 
     loan; and
       (C) any purchaser, trustee, or transferee of any mortgage 
     or credit instrument issued by an original lender under a 
     federally related mortgage loan;
       (2) the term ``covered mortgagor''--
       (A) means an individual--
       (i) who--

       (I) is a mortgagor under a federally related mortgage 
     loan--

       (aa) made by a covered mortgagee; and
       (bb) secured by the principal residence of the mortgagor; 
     or

       (II) is eligible to assume a federally related mortgage 
     loan described in clause (I) in a manner described in 
     paragraph (3), (5), (6), or (7) of section 341(d) of the 
     Garn-St Germain Depository Institutions Act of 1982 (12 
     U.S.C. 1701j-3(d)), if the principal residence of the 
     individual is the principal residence securing the federally 
     related mortgage loan; and

       (ii) who cannot make payments on a federally related 
     mortgage loan due to financial hardship, as determined by the 
     Secretary, in consultation with the Secretary of the Treasury 
     and the Director of the Bureau of Consumer Financial 
     Protection; and
       (B) does not include an individual who the Secretary, in 
     consultation with the Secretary of the Treasury and the 
     Director of the Bureau of Consumer Financial Protection, 
     determines has abandoned the principal residence securing the 
     federally related mortgage loan;
       (3) the term ``federally related mortgage loan'' has the 
     same meaning as in section 3 of the Real Estate Settlement 
     Procedures Act of 1974 (12 U.S.C. 2602);
       (4) the term ``home loan modification protocol'' means a 
     home loan modification protocol that--
       (A) is developed under a home loan modification program 
     developed or put into effect by the Secretary of the 
     Treasury, the Secretary, or the Director of the Bureau of 
     Financial Protection;
       (B) includes principal reduction; and
       (C) to the extent possible, in the case of real property on 
     which there is a first lien and a subordinate lien securing a 
     federally related mortgage loan, requires that any principal 
     reduction with respect to the first lien be accompanied by a 
     proportional principal reduction with respect to the 
     subordinate lien;
       (5) the term ``qualified loan modification'' means a 
     modification to the terms of a mortgage agreement between a 
     covered mortgagee and a covered mortgagor that--
       (A) is made pursuant to a determination by the covered 
     mortgagee using a home loan modification protocol that a 
     modification would--
       (i) produce a greater net present value than not modifying 
     the loan to--

       (I) the covered mortgagee; or
       (II) in the aggregate, all persons that hold an interest in 
     the mortgage agreement; and

       (ii) produce mortgage payments that, at a minimum, are 
     reduced to an affordable and sustainable amount, based on a 
     debt-to-income ratio that takes into account the total 
     housing debt and gross household income of the covered 
     mortgagor;
       (B) applies for the remaining term of the original mortgage 
     agreement, prior to modification or amendment; and
       (C) permits the maximum amount of principal reduction that 
     produces a greater net present value than foreclosure to the 
     persons described in subparagraph (A)(i); and
       (6) the term ``State'' means any State of the United 
     States, the District of Columbia, any territory of the United 
     States, Puerto Rico, Guam, American Samoa, the Trust 
     Territory of the Pacific Islands, the Virgin Islands, and the 
     Northern Mariana Islands.
       (b) Loan Modification Procedures.--
       (1) Initiation of foreclosure.--A covered mortgagee may not 
     initiate a nonjudicial foreclosure or a judicial foreclosure 
     against a covered mortgagor that is otherwise authorized 
     under State law unless--
       (A) the covered mortgagee has used its best efforts to 
     determine whether the covered mortgagor is eligible for a 
     qualified loan modification;
       (B) in the case of a covered mortgagor who the covered 
     mortgagee determines is eligible for a qualified loan 
     modification, the covered mortgagee has used its best efforts 
     to promptly offer a qualified loan modification to the 
     covered mortgagor; and
       (C) in the case of a covered mortgagor who the covered 
     mortgagee determines is not eligible for a qualified loan 
     modification, the covered mortgagee has made available to the 
     covered mortgagor documentation of--
       (i) a loan modification calculation or net present value 
     calculation, including the information necessary to verify 
     and evaluate the calculation, made by the covered mortgagee 
     in relation to the federally related mortgage using a home 
     loan modification protocol;
       (ii) the loan origination, including any note, deed of 
     trust, or other document necessary to establish the right of 
     the mortgagee to foreclose on the mortgage, including proof 
     of assignment of the mortgage to the mortgagee and the right 
     of the mortgagee to enforce the relevant note under the law 
     of the State in which the real property securing the mortgage 
     is located;
       (iii) any pooling and servicing agreement that the covered 
     mortgagee believes prohibits a qualified loan modification;
       (iv) the payment history of the covered mortgagor and a 
     detailed accounting of any costs or fees associated with the 
     account of the covered mortgagor; and
       (v) the specific alternatives to foreclosure considered by 
     the covered mortgagee, including qualified loan 
     modifications, workout agreements, and short sales.
       (2) Foreclosure in progress.--If a covered mortgagee 
     initiated a nonjudicial foreclosure or a judicial foreclosure 
     proceeding against a covered mortgagor before the date of 
     enactment of this Act, the covered mortgagee--
       (A) shall use its best efforts to take all steps necessary 
     to--
       (i) suspend the foreclosure or foreclosure proceeding, as 
     permitted under the law of the State in which the real 
     property securing the federally related mortgage loan is 
     located, including the cancellation of any sale date that has 
     been scheduled with respect to the real property securing the 
     federally related mortgage loan; and
       (ii) toll any deadlines limiting the rights of the covered 
     mortgagor, whether imposed by statute, scheduling order, or 
     otherwise, until the covered mortgagee has complied with the 
     requirements under this section; and
       (B) may not--
       (i) conduct or schedule a sale of the real property 
     securing the federally related mortgage loan; or
       (ii) cause judgment to be entered against the covered 
     mortgagor.
       (3) Reevaluation of application for qualified loan 
     modification.--If, after receiving information under 
     paragraph (1)(C), a covered mortgagor is able to demonstrate 
     that the covered mortgagor is eligible for a qualified loan 
     modification, the covered mortgagee shall--
       (A) promptly reevaluate the application by the covered 
     mortgagor for a qualified loan modification; and
       (B) if the covered mortgagor is eligible, offer the covered 
     mortgagor a qualified loan modification.
       (4) Dispute resolution.--Not later than 90 days after the 
     date of enactment of this Act, the Secretary of the Treasury, 
     the Secretary, and the Director of the Bureau of Financial 
     Protection shall ensure that any home loan modification 
     protocol established by the Secretary of the Treasury, the 
     Secretary, or the Director of the Bureau of Financial 
     Protection, respectively, includes a procedure with a neutral 
     third party to resolve disputes between covered mortgagors

[[Page S1234]]

     and covered mortgagees regarding applications for qualified 
     loan modifications.
       (5) No waiver of rights.--A covered mortgagee may not 
     require a covered mortgagor to waive any right of the covered 
     mortgagor as a condition of making a qualified loan 
     modification.
       (6) Certification required prior to sale of real property 
     securing mortgage.--
       (A) Certification.--A covered mortgagee shall submit to the 
     appropriate State entity in the State in which the real 
     property securing a federally related mortgage loan is 
     located a certification that the covered mortgagee has 
     complied with all requirements of this section, before--
       (i) the covered mortgagee may sell the real property; or
       (ii) a purchaser at sale may file an action to recover 
     possession of the real property.
       (B) Recordation of deed prohibited without certification.--
     The government official responsible for recording deeds and 
     other transfers of real property in a jurisdiction may not 
     permit the recordation of a deed transferring title after a 
     foreclosure relating to a federally related mortgage loan in 
     the jurisdiction unless the government official certifies 
     that--
       (i) the person conducting the sale has demonstrated that 
     the requirements of this subsection have been met with 
     respect to the federally related mortgage loan; or
       (ii) the requirements of this subsection do not apply to 
     the federally related mortgage loan.
       (C) Voiding of sale.--A sale of property in violation of 
     this subsection is void.
       (D) Regulations.--The Secretary, in consultation with the 
     Secretary of the Treasury and Director of the Bureau of 
     Consumer Financial Protection, shall issue regulations 
     establishing the content of the certification under this 
     subparagraph.
       (7) Bar to foreclosure.--Failure to comply with this 
     subsection is a bar to foreclosure under the applicable law 
     of a State.
       (8) Rule of construction.--Nothing in this subsection may 
     be construed to prevent a covered mortgagee from offering or 
     making a loan modification with a lower payment, lower 
     interest rate, or principal reduction beyond that required by 
     a modification made using a home loan modification protocol 
     with respect to a covered mortgagor.
       (c) Fees Prohibited.--
       (1) Loan modification fees prohibited.--A covered mortgagee 
     may not charge a fee to a covered mortgagor for carrying out 
     the requirements under subsection (b).
       (2) Foreclosure-related fees.--
       (A) In general.--Except as provided in subparagraph (B) and 
     (C), a covered mortgagee may not charge a foreclosure-related 
     fee to a covered mortgagor before--
       (i) the covered mortgagee has made a determination under 
     subsection (b)(1); and
       (ii) the mortgage has entered the foreclosure process.
       (B) Delinquency fees.--A covered mortgagee may charge 1 
     delinquency fee for each late payment by a covered mortgagor, 
     if the fee is specified by the mortgage agreement and 
     permitted by other applicable Federal and State law. A 
     delinquency fee may be collected only once on an installment 
     however long it remains in default.
       (C) Other fees.--A covered mortgagee may charge a covered 
     mortgagor 1 property valuation fee and 1 title search fee in 
     connection with a foreclosure.
       (3) Fees not in contract.--A covered mortgagee may charge a 
     fee to a covered mortgagor only if--
       (A) the fee was specified by the mortgage agreement before 
     a modification or amendment; and
       (B) the fee is otherwise permitted under this subsection.
       (4) Fees for expenses incurred.--
       (A) In general.--A covered mortgagee may charge a fee to a 
     covered mortgagor only--
       (i) for services actually performed by the covered 
     mortgagee or a third party in relation to the mortgage 
     agreement, before a modification or amendment; and
       (ii) if the fee is reasonably related to the actual cost of 
     providing the service.
       (B) Home preservation services.--A covered mortgagee may 
     charge a fee to a covered mortgagor for home preservation 
     services, only if the covered mortgagor has not submitted a 
     payment under the federally related mortgage during the 60-
     day period ending on the date the fee is charged.
       (5) Forceplaced insurance.--
       (A) Fee permitted.--If a home insurance policy on the real 
     property securing a federally related mortgage loan lapses 
     due to the failure of a covered mortgagor to make a payment, 
     a covered mortgagee may charge the covered mortgagor a fee in 
     an amount equal to the actual cost of continuing or re-
     establishing the home insurance policy on the same terms in 
     effect before the lapse.
       (B) Recovery of fee.--A covered mortgagee may recover the 
     fee described in subparagraph (A)--
       (i) by establishing an escrow account in accordance with 
     section 10 of the Real Estate Settlement Procedures Act of 
     1974 (12 U.S.C. 2609); or
       (ii) in equal monthly amounts during one 12-month period.
       (6) Penalty.--The Director of the Bureau of Consumer 
     Financial Protection shall collect from any covered mortgagee 
     that charges a fee in violation of this subsection an amount 
     equal to $6,000 for each such fee.
       (d) Regulations.--Not later than 3 months after the date of 
     enactment of this Act, the Secretary, in consultation with 
     the Secretary of the Treasury and the Director of the Bureau 
     of Consumer Financial Protection, shall issue by notice any 
     requirements to carry out this section. The Secretary shall 
     subsequently issue, after notice and comment, final 
     regulations to carry out this section.
       (e) Bureau of Consumer Financial Protection Home Loan 
     Modification Protocol.--Not later than 90 days after the date 
     of enactment of this Act, the Director of the Bureau of 
     Consumer Financial Protection shall develop a home loan 
     modification protocol.
       (f) Treasury and HUD Home Loan Modification Protocols.--Not 
     later than 90 days after the date of enactment of this Act, 
     the Secretary of the Treasury and the Secretary shall make 
     any changes to the home loan modification protocol of the 
     Secretary of the Treasury and the Secretary, respectively, 
     that are necessary to carry out this Act.

     SEC. 4. MEDIATION INITIATIVES.

       (a) Definitions.--In this section--
       (1) the term ``mortgagee'' includes the agent of a 
     mortgagee; and
       (2) the term ``mediation'' means a process in which a 
     neutral third party presides over discussions between 
     mortgagors and mortgagees to review and discuss available 
     loss mitigation options in order to avoid foreclosure.
       (b) Grant Program Established.--The Secretary shall 
     establish a grant program to make competitive grants to State 
     and local governments to establish mediation programs that 
     assist mortgagors facing foreclosure.
       (c) Mediation Programs.--A mediation program established 
     using a grant under this section shall--
       (1) require participation in the program by--
       (A) any mortgagee that seeks to initiate or has initiated a 
     judicial or nonjudicial foreclosure; and
       (B) any mortgagor who is subject to a judicial or 
     nonjudicial foreclosure;
       (2) require that a representative of the mortgagee who has 
     authority to decide on loss mitigation options (including 
     loan modification) participate, in person, in scheduled 
     sessions;
       (3) require any mortgagee or mortgagor required to 
     participate in the program to make a good faith effort to 
     resolve promptly, through mediation, issues relating to the 
     default on the mortgage;
       (4) if mediation is not made available to the mortgagor 
     before a foreclosure proceeding is initiated, allow the 
     mortgagor to request mediation at any time before a 
     foreclosure sale;
       (5) provide that any proceeding to foreclose that is 
     initiated by the mortgagee shall be stayed until the mediator 
     has issued a written certification that the mortgagee 
     complied in good faith with its obligations under the 
     mediation program established under this section;
       (6) provide for--
       (A) supervision by a State court (or a State court in 
     conjunction with an agency or department of a State or local 
     government) of the mediation program;
       (B) selection and training of neutral, third-party 
     mediators by a State court (or an agency or department of the 
     State or local government);
       (C) penalties to be imposed by a State court, or an agency 
     or department of a State or local government, if a mortgagee 
     fails to comply with an order to participate in mediation; 
     and
       (D) consideration by a State court (or an agency or 
     department of a State or local government) of recommendations 
     by a mediator relating to penalties for failure to fulfill 
     the requirements of the mediation program;
       (7) require that each mortgagee that participates in the 
     mediation program make available to the mortgagor, before and 
     during participation in the mediation program, documentation 
     of--
       (A) a loan modification calculation or net present value 
     calculation, including the information necessary to verify 
     and evaluate the calculation, made by the mortgagee in 
     relation to the mortgage using a home loan modification 
     protocol;
       (B) the loan origination, including any note, deed of 
     trust, or other document necessary to establish the right of 
     the mortgagee to foreclose on the mortgage, including proof 
     of assignment of the mortgage to the mortgagee and the right 
     of the mortgagee to enforce the relevant note under the law 
     of the State in which the real property securing the mortgage 
     is located;
       (C) any pooling and servicing agreement that the mortgagee 
     believes prohibits a loan modification;
       (D) the payment history of the mortgagor and a detailed 
     accounting of any costs or fees associated with the account 
     of the mortgagor; and
       (E) the specific alternatives to foreclosure considered by 
     the mortgagee, including loan modifications, workout 
     agreements, and short sales;
       (8) prohibit a mortgagee from shifting the costs of 
     participation in the mediation program, including the 
     attorney's fees of the mortgagee, to a mortgagor;
       (9) provide that--
       (A) any holder of a junior lien against the property that 
     secures a mortgage that is the subject of a mediation--
       (i) be notified of the mediation; and
       (ii) be permitted to participate in the mediation; and

[[Page S1235]]

       (B) any proceeding initiated by a holder of a junior lien 
     against the property that secures a mortgage that is the 
     subject of a mediation be stayed pending the mediation;
       (10) provide information to mortgagors about housing 
     counselors approved by the Secretary; and
       (11) be free of charge to the mortgagor and mortgagee.
       (d) Recordkeeping.--A State or local government that 
     receives a grant under this section shall keep a record of 
     the outcome of each mediation carried out under the mediation 
     program, including the nature of any loan modification made 
     as a result of participation in the mediation program.
       (e) Targeting.--A State that receives a grant under this 
     section may establish--
       (1) a statewide mediation program; or
       (2) a mediation program in a specific locality that the 
     State determines has a high need for such program due to--
       (A) the number of foreclosures in the locality; or
       (B) other characteristics of the locality that contribute 
     to the number of foreclosures in the locality.
       (f) Federal Share.--The Federal share of the cost of a 
     mediation program established using a grant under this 
     section may not exceed 50 percent.
       (g) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section such sums as may 
     be necessary for each of fiscal years 2011 through 2014.

     SEC. 5. OVERSIGHT OF PUBLIC AND PRIVATE EFFORTS TO REDUCE 
                   MORTGAGE DEFAULTS AND FORECLOSURES.

       (a) Definitions.--In this section--
       (1) the term ``heads of appropriate agencies'' means the 
     Comptroller of the Currency, the Board of Governors of the 
     Federal Reserve System, the Federal Deposit Insurance 
     Corporation, the National Credit Union Administration, the 
     Director of the Bureau of Consumer Financial Protection, the 
     Director of the Office of Financial Research of the 
     Department of the Treasury, and a representative of State 
     banking regulators selected by the Secretary;
       (2) the term ``mortgagee'' means--
       (A) an original lender under a mortgage;
       (B) any servicers, affiliates, agents, subsidiaries, 
     successors, or assignees of an original lender; and
       (C) any subsequent purchaser, trustee, or transferee of any 
     mortgage or credit instrument issued by an original lender; 
     and
       (3) the term ``servicer'' means any person who collects on 
     a home loan, whether such person is the owner, the holder, 
     the assignee, the nominee for the loan, or the beneficiary of 
     a trust, or any person acting on behalf of such person.
       (b) Monitoring of Home Loans.--
       (1) In general.--The Secretary, in consultation with the 
     heads of appropriate agencies, shall develop and implement a 
     plan to monitor--
       (A) conditions and trends in homeownership and the mortgage 
     industry, in order to predict trends in foreclosures to 
     better understand other critical aspects of the mortgage 
     market; and
       (B) the effectiveness of public and private efforts to 
     reduce mortgage defaults and foreclosures.
       (2) Report to congress.--Not later than 1 year after the 
     development of the plan under paragraph (1), and each year 
     thereafter, the Secretary shall submit a report to Congress 
     that--
       (A) summarizes and describes the findings of the monitoring 
     required under paragraph (1); and
       (B) includes recommendations or proposals for legislative 
     or administrative action necessary--
       (i) to increase the authority of the heads of appropriate 
     agencies to levy penalties against any mortgagee, or other 
     person or entity, who fails to comply with the requirements 
     described in this section;
       (ii) to improve coordination between public and private 
     initiatives to reduce the overall rate of mortgage defaults 
     and foreclosures; and
       (iii) to improve coordination between initiatives 
     undertaken by Federal, State, and local governments.

     SEC. 6. HOUSING TRUST FUND.

       From funds received or to be received by the Secretary of 
     the Treasury from the sale of warrants under title I of the 
     Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5211 
     et seq.), the Secretary of the Treasury shall transfer and 
     credit $1,000,000,000 to the Housing Trust Fund established 
     under section 1338 of the Federal Housing Enterprises 
     Financial Safety and Soundness Act of 1992 (12 U.S.C. 4568) 
     for use in accordance with such section.

  Mr. WHITEHOUSE. Mr. President, I rise today to speak in support of 
legislation I have introduced with Senators Reed, Merkley, Sanders and 
Tester to enhance foreclosure protections for our servicemembers and 
their families, and to help ensure that their rights under the 
Servicemembers Civil Relief Act are not violated.
  We have all heard horror stories about how servicers treat homeowners 
in distress. When these abusive mortgage practices harm the men and 
women who are sent into harm's way to protect our country, it is a 
particular tragedy and it deserves our urgent attention.
  Not only are these practices illegal and morally repugnant, they can 
also be a dangerous distraction from our military mission. Holly 
Petraeus, General Petraeus' wife, leads the Consumer Financial 
Protection Bureau's Office for Service Member Affairs, and she 
testified on this issue during a recent hearing before the House 
Veterans' Affairs Committee. As she put it, ``[i]t is a terrible 
situation for the family at home and for the servicemember abroad who 
feels helpless.''
  Service members over at the point of the spear in Afghanistan have 
enough to worry about without worrying about the bank foreclosing on 
their family.
  According to recent media reports, it has come to light that 
financial institutions have repeatedly failed to comply with the 
Servicemembers Civil Relief Act or ``SCRA''. These violations led to 
thousands of mortgage overcharges and a number of unlawful 
foreclosures. Under the SCRA, it is illegal to foreclose on a protected 
servicemember unless an authorization by a judge is obtained. Then, the 
judge can only act after a hearing is held in which the military 
homeowner is represented.
  One of the most troubling cases is the story of SGT James B. Hurley, 
who lost his home while he was serving in Iraq. Like many Reservists, 
Sergeant Hurley made less money serving on active duty than he did in 
his civilian job. So, when he was mobilized, it became a real struggle 
for his family to afford his mortgage and they fell behind in making 
his payments.

  The SCRA was designed to protect our servicemembers from financial 
challenges associated with deployments, and it should have prevented 
the bank from foreclosing on Sergeant Hurley. However, the bank 
violated the SCRA, foreclosing on Sergeant Hurley illegally, and 
forcing his wife and children out of their home. Sergeant Hurley 
returned from combat, as a disabled veteran, only to find that the bank 
had sold the home that he worked so hard to build.
  The current economic climate has hit our returning veterans 
particularly hard, adding to the financial challenges our deployed 
servicemembers already face. According to a recent Department of Labor 
report, the unemployment rate for veterans rose to 9.9 percent overall, 
and 15.2 percent for veterans of the wars in Iraq and Afghanistan.
  These heartbreaking statistics underscore how difficult it can be to 
readjust economically to life at home. For our returning servicemembers 
that need time to get back on financial solid footing, to rebuild what 
they had to walk away from to defend the rest of us, we should do 
everything we can to accommodate their needs, especially during these 
difficult economic times.
  The Protecting Servicemembers from Mortgage Abuses Act of 2011, which 
I am introducing would encourage compliance with the SCRA by doubling 
the maximum criminal penalties for violations of its foreclosure and 
eviction protections. It would also double civil penalties in cases 
where the Attorney General has commenced a civil action against the 
lender.
  In addition, the bill will give servicemembers the time they need 
after returning from deployment to regain solid financial footing, by 
extending the period of foreclosure protection coverage from 9 to 24 
months after military service has ended.
  I hope Senators on both sides of the aisle will come together and 
join me in supporting legislation to discourage loan servicers from 
further violations and help to protect the financial and emotional 
well-being of our troops.
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