116th CONGRESS 1st Session |
To make necessary reforms to improve compliance with loss mitigation requirements by servicers of mortgages for single family housing insured by the FHA, and for other purposes.
July 25, 2019
Ms. Cortez Masto (for herself and Mr. Van Hollen) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs
To make necessary reforms to improve compliance with loss mitigation requirements by servicers of mortgages for single family housing insured by the FHA, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
This Act may be cited as the “FHA Foreclosure Prevention Act of 2019”.
SEC. 2. Documentation of loss mitigation efforts.
Section 204(a) of the National Housing Act (12 U.S.C. 1710(a)) is amended by adding at the end the following:
“(10) DOCUMENTATION OF LOSS MITIGATION EFFORTS.—
“(A) IN GENERAL.—Notwithstanding any other provision of this title, the Secretary may not pay insurance benefits to any mortgagee of a single family mortgage insured under this Act unless the mortgagee or other servicer for the mortgage has provided documentation to the Secretary that is sufficient to demonstrate compliance with any requirements of the Secretary applicable to the mortgage relating to loss mitigation.
“(B) RULE OF CONSTRUCTION.—Nothing in this paragraph may be construed to limit the authority of the Secretary to impose civil monetary penalties.”.
SEC. 3. HUD oversight of servicers.
Section 533 of the National Housing Act (12 U.S.C. 1735f–11) is amended by adding at the end the following:
“(d) Oversight of mortgage servicers.—
“(A) IN GENERAL.—The Secretary shall conduct oversight of servicers of single family mortgages insured under this Act on a regular and ongoing basis and in a manner designed to—
“(i) ensure that the servicers comply with the requirements of this Act and the standards and guidelines established by the Secretary for the servicing of those mortgages; and
“(ii) identify systemic problems and trends with the compliance described in clause (i).
“(B) LOSS MITIGATION REQUIREMENTS.—The oversight conducted under subparagraph (A) shall include—
“(i) oversight designed to ensure that the servicers comply with the requirements under this Act, and the standards and guidelines established by the Secretary, for loss mitigation; and
“(ii) appropriate sampling and review of the compliance described in clause (i), including direct information collection through generally accepted means from borrowers whose files were sampled, such as surveys, focus groups, interview, or other similar measures.
“(2) CORRECTIVE ACTION.—The Secretary shall take such actions as may be necessary to remedy failures by servicers of single family mortgages insured under this Act to comply with the requirements of this Act and the standards and guidelines established by the Secretary for the servicing of those mortgages, including ordering noncompliant servicers to take corrective actions, including barring foreclosure and cancelling from the borrower's account balance and from any insurance claim any interest and other fees that accrued during periods of noncompliance.”.
SEC. 4. Complaint procedure regarding loss mitigation.
Title V of the National Housing Act (12 U.S.C. 1731a et seq.) is amended by adding at the end the following:
“SEC. 543. Complaint procedure regarding loss mitigation.
“(a) Complaint procedure for borrowers.—
“(1) FEATURES.—The Secretary shall establish and maintain a procedure for mortgagors under single family mortgages insured under this Act to register complaints with the Secretary regarding servicing, including loss mitigation actions, which shall—
“(A) include making available to the public a website of the Department of Housing and Urban Development, an e-mail address, a phone number, and a mailing address for registering complaints; and
“(B) provide an opportunity for servicers to respond to complaints and submit information regarding complaints.
“(2) ATTEMPT TO RESOLVE.—For each complaint registered under the procedure established under this subsection, the Secretary shall—
“(A) review the complaint and any response by the servicer; and
“(B) seek to resolve any dispute between the mortgagor and the servicer and make a determination regarding the complaint.
“(3) USE OF INFORMATION.—In making any determination regarding the compliance of a servicer with the requirements, standards, and guidelines for servicing, including in identifying systemic problems and trends with servicing, the Secretary shall take into consideration information obtained under the procedure established under this subsection.
“(b) Notification of opportunity To appeal.—Upon making a determination with respect to a complaint regarding servicing, the Secretary shall notify the complainant of—
“(1) the determination;
“(2) the opportunity for the complainant to appeal an adverse determination under the procedure established under subsection (a); and
“(3) the requirements for and how to initiate an appeal described in paragraph (2).
“(1) ESTABLISHMENT.—The Secretary—
“(A) shall provide a procedure for mortgagors to appeal an adverse determination by the Secretary regarding a complaint registered under the procedure established under subsection (a); and
“(B) if appropriate, may take action pursuant to section 533(d)(2) with respect to a decision on an appeal described in subparagraph (A).
“(2) LIMITATION.—The procedure established under this subsection may not provide an appeal for any complaint that was previously appealed under the procedure.
“(d) Prohibition on foreclosure.—The Secretary shall prohibit the foreclosure of a mortgage during any period that a complaint or appeal regarding the mortgage is pending under the procedures established under this section and during a reasonable period after a complainant is notified of a determination regarding a complaint that provides the complainant an opportunity to appeal the decision.
“(e) Reporting.—The Secretary shall submit an annual report to Congress regarding complaints received under the procedure maintained under subsection (a), which shall—
“(1) specify the number of complaints received, disaggregated by types of complaints, status of complaints, geographic distribution of complaints, and average times for resolution of complaints;
“(2) include relevant information submitted by servicers and any other information that the Secretary considers relevant; and
“(3) comply with any applicable privacy protections.”.
SEC. 5. Notice to borrowers of loss mitigation status and decisions.
Section 204(a) of the National Housing Act (12 U.S.C. 1710(a)), as amended by section 2, is amended by adding at the end the following:
“(11) NOTICE TO BORROWERS OF LOSS MITIGATION STATUS AND DECISIONS.—
“(A) REQUIRED NOTICE.—The Secretary shall require that, before any acceleration of the indebtedness due under a mortgage, the servicer for the mortgage shall provide written notice to the mortgagor that includes—
“(i) a summary explaining how the servicer applied the loss mitigation option priority analysis established by the Secretary, including the loss mitigation review waterfall under section III.A.2.j.iii of the FHA Single Family Housing Policy Handbook 4000.1, or any successor provision, and setting forth the actual information entered in applying the analysis;
“(ii) if the servicer did not conduct the analysis described in clause (i) because the servicer determined that the mortgagor did not express any interest in loss mitigation or provide appropriate documents—
“(I) a statement of that determination;
“(II) a description of the actions that the servicer took to solicit the borrower for loss mitigation review and obtain appropriate documents; and
“(III) a statement of the dates that the servicer took the actions described in subclause (II);
“(iii) a statement setting forth the results of the monthly loss mitigation evaluations of the servicer for the mortgage required under section 203.605(a) of title 24, Code of Federal Regulations, or any successor regulation;
“(iv) with respect to any loss mitigation action for which the mortgagor was determined to be ineligible, an explanation of, and documentation showing, why the mortgagor was determined to be ineligible;
“(v) a statement informing the borrower that, upon the request of the borrower, the Secretary shall provide the borrower with all loss mitigation evaluation documentation required by the Secretary with respect to the mortgage, including the monthly evaluations described in clause (iii); and
“(vi) information describing the procedure under section 543(a) for registering complaints regarding loss mitigation and the procedure under section 543(c) for appealing the decision of a servicer regarding loss mitigation actions.
“(B) REFERENCES.—The notice required under subparagraph (A) shall—
“(i) contain references to the applicable provisions of the applicable handbook of the Department of Housing and Urban Development regarding ongoing loss mitigation reviews and the standards for those reviews; and
“(ii) identify how the provisions described in clause (i) may be accessed on a publicly accessible website of the Department of Housing and Urban Development.”.
Nothing in this Act may be construed to supercede, or exempt any person from complying with, any provision of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) or any regulations issued under that Act.