[Congressional Record Volume 164, Number 40 (Wednesday, March 7, 2018)]
[Senate]
[Pages S1485-S1486]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 2119. Mr. MENENDEZ submitted an amendment intended to be proposed
by him to the bill S. 2155, to promote economic growth, provide
tailored regulatory relief, and enhance consumer protections, and for
other purposes; which was ordered to lie on the table; as follows:
At the end, add the following:
TITLE VI--FORECLOSURE PROCEEDINGS AND ABANDONED FORECLOSURES
SEC. 601. NOTIFICATION REQUIREMENTS FOR SERVICERS THAT
INITIATE FORECLOSURE PROCEEDINGS.
The Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2601 et seq.) is amended--
(1) in section 3 (12 U.S.C. 2602)--
(A) in paragraph (8), by striking ``and'' at the end;
(B) in paragraph (9), by striking the period at the end and
inserting ``; and''; and
(C) by adding at the end the following:
``(10) the term `enterprise' has the meaning given the term
in section 1303 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4502).''; and
(2) in section 6 (12 U.S.C. 2605), by adding at the end the
following:
``(n) Notices Relating to Foreclosure.--
``(1) Definition.--In this subsection, the term `covered
loan' means--
``(A) a federally related mortgage loan; or
``(B) a non-performing loan purchased from a Federal agency
or an enterprise.
``(2) Initial notice requirement.--
``(A) In general.--A servicer of a covered loan that makes
the first notice or filing required by applicable State law
for a judicial or non-judicial foreclosure process against a
borrower and any other record owners shall notify the
borrower and any other record owners in writing that, until
the date on which the deed and title for the property for
which the covered loan was made are transferred to another
person, the borrower and any other record owners--
``(i) may remain in the property until such time as the
borrower and any other record owners are required to vacate
the property under State law; and
``(ii) shall, to the extent required under State law, be
responsible for the payment of any taxes, assessments, and
other fees associated with the property.
``(B) State law requirements.--A servicer of a covered loan
is not required to provide the written notice described in
subparagraph (A) if the servicer provides notice to the
borrower and any other record owners, under applicable State
law, of the information described in subparagraph (A).
``(3) Notice of charge-off and release of lien.--
``(A) In general.--If a servicer of a covered loan makes
the first notice or filing required by applicable State law
for a judicial or non-judicial foreclosure process against a
borrower and any other record owners and subsequently charges
off the covered loan and releases the lien on the property
for which the covered loan was made, the servicer shall
provide prompt notice, in writing, of the charge-off and
release to--
``(i) the borrower and any other record owners, which shall
include a statement that--
``(I) the title to the property is no longer encumbered by
the lien;
``(II) the covered loan has been discharged;
``(III) the borrower and any other record owners may face
income tax consequences related to the discharged covered
loan; and
``(IV) the borrower and any other record owners may want to
consult a tax advisor; and
``(ii) the taxing district in which the property is
located.
``(B) Required attempts.--A servicer that is required to
provide notice to a borrower and any other record owners
under subparagraph (A)(i)--
``(i) shall make not less than 3 attempts to provide the
notice, where the servicer makes--
``(I) not less than 2 attempts to provide the notice by
telephone; and
``(II) not less than 1 attempt to provide the notice in
writing; and
``(ii) shall attempt to locate the borrower and any other
record owners and provide the notice if the servicer has
information that the borrower and any other record owners no
longer reside at the property.
``(C) Language.--A servicer shall provide the notice under
subparagraph (A)(i) in the preferred language of the borrower
if the servicer has information that the borrower has
indicated a preferred language other than English.
``(4) Standard notification forms.--The Bureau may develop
and issue standard forms, which may be submitted in paper or
electronic format, for the provision of the notices required
under paragraphs (2) and (3).
``(5) Database of abandoned foreclosures.--
``(A) Definition.--In this paragraph, the term `abandoned
foreclosure' means a covered loan--
``(i) that is secured by a property that was the principal
residence of the borrower--
``(I) at the time of the origination of the covered loan;
or
``(II) when the servicer of the covered loan made the first
notice or filing required by applicable State law for a
judicial or non-judicial foreclosure process;
``(ii) that is not an open-end credit or reverse mortgage
loan; and
``(iii) where the servicer of the covered loan--
``(I) has made the first notice or filing required by
applicable State law for a judicial or non-judicial
foreclosure process; and
``(II) has--
``(aa) ceased to pursue additional action in the
foreclosure process; or
``(bb) charged off the covered loan and released the lien
on the property for which the covered loan was made.
``(B) Database.--Not later than 3 years after the date of
enactment of this subsection, the Bureau shall establish,
maintain, and periodically update a database of abandoned
foreclosures.
``(C) Contents.--The database established under
subparagraph (B) shall include, for each abandoned
foreclosure--
``(i) the address information for the property;
``(ii) the status of the deed or title to the property;
``(iii) the number of days the borrower was delinquent
before the servicer initiated the foreclosure;
``(iv) the outstanding amount of the covered loan at the
time the servicer initiated the foreclosure;
``(v) the date on which the servicer initiated the
foreclosure;
``(vi) the date on which the servicer charged off the
covered loan and released the lien; and
``(vii) the amount of the covered loan charged off by the
servicer.
``(D) Accessibility.--The Bureau may, at the discretion of
the Director of the Bureau,
[[Page S1486]]
provide access to the database established under subparagraph
(B) to taxing districts.
``(E) Protection of information.--The Bureau shall take
appropriate and necessary steps to ensure the protection of
personally identifiable information in the database
established under subparagraph (B).
``(6) Rule of construction.--Nothing in this section shall
be construed to preempt or prohibit any provision of State
law with respect to notice provided to borrowers relating to
a foreclosure, except to the extent that the requirements of
this section provide greater notice to such a borrower.''.
SEC. 602. SELLER AND SERVICER ELIGIBILITY.
(a) Enterprises.--
(1) In general.--Not later than 90 days after the date of
enactment of this Act, the Federal Housing Finance Agency
shall promulgate a rule that provides that a seller or
servicer of a mortgage loan held by the Federal National
Mortgage Association or the Federal Home Loan Mortgage
Corporation (or an affiliate thereof)--
(A) may not, with respect to the mortgage loan--
(i) make the first notice or filing required by applicable
State law for a judicial or non-judicial foreclosure process;
and
(ii) following the notice or filing, cease to pursue
additional action in the foreclosure process or charge off
the mortgage loan unless the seller or servicer
contemporaneously records a release of the mortgage loan in
the registry of deeds in which the mortgage is recorded,
which release shall include a discharge of the debt secured
by the mortgage loan; and
(B) with respect to the servicer of the mortgage loan, is
required to comply with the notice requirements under
paragraphs (1) and (2) of section 6(n) of the Real Estate
Settlement Procedures Act of 1974, as added by section 601.
(2) Rule of construction.--Nothing in paragraph (1) shall
be construed to inhibit or preclude a seller or servicer of a
mortgage loan described in paragraph (1) from continuing or
initiating loss mitigation during the foreclosure process,
including participating in any available mediation program or
process under State law.
(b) Federal Housing Administration.--Section 203 of the
National Housing Act (12 U.S.C. 1709) is amended by adding at
the end the following:
``(z) Prohibition on Abandoned Foreclosures.--
``(1) In general.--To be eligible to service a mortgage
insured under this section, a servicer may not, with respect
to the mortgage--
``(A) make the first notice or filing required by
applicable State law for a judicial or non-judicial
foreclosure process; and
``(B) following the notice or filing, cease to pursue
additional action in the foreclosure process or charge off
the mortgage unless the servicer contemporaneously records a
release of the mortgage in the registry of deeds in which the
mortgage is recorded, which release shall include a discharge
of the debt secured by the mortgage.
``(2) Required notice.--A servicer of a mortgage insured
under this section shall comply with the notice requirements
under paragraphs (2) and (3) of section 6(n) of the Real
Estate Settlement Procedures Act of 1974.
``(3) Rule of construction.--Nothing in paragraph (1) shall
be construed to inhibit or preclude a servicer of a mortgage
from continuing or initiating loss mitigation during the
foreclosure process, including participating in any available
mediation program or process under State law.''.
SEC. 603. GAO STUDY ON ABANDONED FORECLOSURES.
(a) Definitions.--In this section:
(1) Abandoned foreclosure.--The term ``abandoned
foreclosure'' means a covered loan--
(A) that is secured by a property that was the principal
residence of the borrower--
(i) at the time of the origination of the covered loan; or
(ii) when the servicer of the covered loan made the first
notice or filing required by applicable State law for a
judicial or non-judicial foreclosure process;
(B) that is not an open-end credit or reverse mortgage
loan; and
(C) where the servicer of the covered loan--
(i) has made the first notice or filing required by
applicable State law for a judicial or non-judicial
foreclosure process; and
(ii) has--
(I) ceased to pursue additional action in the foreclosure
process; or
(II) charged off the covered loan and released the lien on
the property for which the covered loan was made.
(2) Covered loan.--The term ``covered loan'' means--
(A) a federally related mortgage loan; or
(B) a non-performing loan purchased from a Federal agency
or an enterprise.
(3) Enterprise.--The term ``enterprise'' has the meaning
given the term in section 1303 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4502).
(4) Federally related mortgage loan.--The term ``federally
related mortgage loan'' has the meaning given the term in
section 3 of the Real Estate Settlement Procedures Act of
1974 (12 U.S.C. 2602).
(b) Study.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General of the United
States shall submit to Congress, the Committee on Banking,
Housing, and Urban Affairs of the Senate, and the Committee
on Financial Services of the House of Representatives a
report on--
(1) the incidence and concentration of abandoned
foreclosures;
(2) the impact of abandoned foreclosures on neighborhood
and community property values, including the propensity of
abandoned foreclosures to lead to foreclosures on neighboring
properties; and
(3) the best available methods to collect information on
abandoned foreclosures, taking into account the cost of
collecting that information.
(c) Recommendations.--The report submitted under subsection
(b) may include recommendations for additional requirements
or conditions for servicers with respect to charging off
covered loans or releasing liens on abandoned foreclosures.
SEC. 604. RULE OF CONSTRUCTION.
Nothing in this title or the amendments made by this title
shall be construed to limit the rights of a tenant to remain
in a property during a foreclosure process that are in effect
under Federal or State law as of the date of enactment of
this Act.
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