Sec. 2. Standards for mortgage servicers
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Chapter 2 of the Truth in Lending Act ( 15 U.S.C. 1631 et seq. ) is amended by inserting after section 129H the following new section: In this section, the following definitions shall apply: The term alternative to foreclosure — means a course of action with respect to a mortgage offered by a servicer to a borrower as an alternative to a covered foreclosure action; and includes a short sale and a deed in lieu of foreclosure. The term borrower means a mortgagor under a mortgage who is in default or at risk of imminent default, as determined by the Director, by rule.
The term covered foreclosure action means a judicial or nonjudicial foreclosure. The term independent reviewer — means an entity that has the expertise and capacity to determine whether a borrower is eligible to participate in a loan modification program; and includes— an entity that is not a servicer; or a division within a servicer that is independent of, and not under the same immediate supervision as, any division that makes determinations with respect to applications for loan modifications or alternatives to foreclosure.
The term loan modification program — means a program or procedure designed to change the terms of a mortgage in the case of the default, delinquency, or imminent default or delinquency of a mortgagor; and includes— a loan modification program established by the Federal Government, including the Home Affordable Modification Program of the Department of the Treasury; and a loan modification program established by a servicer. The term mortgage means a federally related mortgage loan, as defined in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602(3)), that is secured by a first or subordinate lien on residential real property that is the primary residence of the borrower.
The term servicer — has the same meaning as in section 6(i) of the Real Estate Settlement Procedures Act of 1974 ( 12 U.S.C. 2605(i) ); and includes a person responsible for servicing a pool of mortgages. A servicer shall assign 1 case manager to each borrower that seeks a loan modification or an alternative to foreclosure. The case manager assigned under paragraph
(1)shall be an individual who— manages the communications between the servicer and the borrower; has the authority to make decisions about the eligibility of the borrower for a loan modification or an alternative to foreclosure; is available to communicate with the borrower by telephone and email during business hours; and remains assigned to the borrower until the earliest of— the date on which the borrower accepts a loan modification or an alternative to foreclosure; the date on which the servicer forecloses on the mortgage of the borrower; or the date on which a release of the mortgage of the borrower is recorded in the appropriate land records office, as determined by the Director, by rule. A servicer may assign an employee to assist a case manager assigned under paragraph (1), if the case manager remains available to communicate with the borrower by telephone and email. A servicer may not initiate a covered foreclosure action against a borrower unless the servicer has— completed a full review of the file of the borrower to determine whether the borrower is eligible for a loan modification or an alternative to foreclosure; made a reasonable effort to obtain the information necessary to determine whether the borrower is eligible for a loan modification or an alternative to foreclosure, as described in paragraph (3); and offered the borrower a loan modification or an alternative to foreclosure, if the borrower is eligible for the loan modification or alternative to foreclosure. A servicer shall suspend a covered foreclosure action that was initiated before the date of enactment of this section until the servicer— completes a full review of the file of the borrower to determine whether the borrower is eligible for a loan modification or an alternative to foreclosure; notifies the borrower of the determination under clause (i); and offers the borrower a loan modification or an alternative to foreclosure, if the borrower is eligible for a loan modification or an alternative to foreclosure. During the period of the suspension under subparagraph (A), a servicer may not— send a notice of foreclosure to a borrower; conduct or schedule a sale of the residential real property securing the mortgage of the borrower; or cause final judgment to be entered against the borrower. A servicer is not required to suspend a covered foreclosure action under subparagraph
(A)if the servicer— makes a reasonable effort to obtain information necessary to determine whether the borrower is eligible for a loan modification or an alternative to foreclosure, as described in paragraph (3); and documents that the servicer has not received information necessary to determine whether the borrower is eligible for a loan modification or an alternative to foreclosure before the end of the applicable period under paragraph (3). Nothing in this section may be construed to require a servicer to delay an unavoidable foreclosure, such as foreclosure that results from a borrower abandoning the residential real property securing the mortgage of such borrower. A servicer shall be deemed to have made a reasonable effort to obtain information necessary to determine whether the borrower is eligible for a loan modification or an alternative to foreclosure if such servicer takes the following steps: During the 30-day period beginning on the date of delinquency of the borrower, the servicer shall attempt to establish contact with the borrower by— making not fewer than 4 telephone calls to the telephone number on record for the borrower, at different times of the day; and sending not fewer than 2 written notices to the borrower at the address on record for the borrower, at least 1 of which shall be delivered by certified mail, requesting that the borrower contact the servicer. In the case that a servicer is not able to establish contact with the borrower by telephone under subclause
(I)of clause
(i)or such borrower does not respond to the notices sent under subclause
(II)of such clause, such servicer shall, following a third party review under subsection (d), notify the borrower that the servicer intends to initiate or continue a covered foreclosure action. In the case that a servicer is able to establish contact with the borrower under subparagraph (A)(i), the servicer shall— notify the borrower, in writing, that the servicer lacks information necessary to determine whether the borrower is eligible for a loan modification or an alternative to foreclosure; and send the borrower a written request that the borrower transmit to the servicer, not later than 30 days after the date on which such request sent by the servicer is postmarked, all information necessary to determine whether the borrower is eligible for a loan modification or an alternative to foreclosure. In the case that the servicer does not receive from the borrower all information requested under clause
(ii)of subparagraph
(B)within the time period described in such subparagraph, the servicer shall send the borrower an additional written request that the borrower transmit to the servicer, not later than 15 days after the date on which such request sent by the servicer is postmarked, all information necessary to determine whether the borrower is eligible for a loan modification or an alternative to foreclosure. In the case that the servicer does not receive from the borrower all information requested under subparagraph
(C)within the time period described in such subparagraph, the servicer shall, following a third party review under subsection (d), notify the borrower that the servicer intends to initiate or continue a covered foreclosure action. Unless otherwise provided for in this subsection, before a servicer notifies a borrower that the borrower is not eligible for a loan modification or an alternative to foreclosure, the servicer shall obtain the services of an independent reviewer to— review the file of the borrower; and determine whether the borrower is eligible for a loan modification or an alternative to foreclosure. Paragraph
(1)shall not apply to a servicer that is a community financial institution, as defined in section 2(10) of the Federal Home Loan Bank Act (12 U.S.C. 1422(10)). Subject to paragraph (2), a violation of this Act shall be a bar to a covered foreclosure action. If a servicer is in compliance with this section, the servicer may bring or proceed with a covered foreclosure action, without regard to a prior violation of this section by the servicer. A servicer that fails to comply with any requirement imposed under this section shall be liable to a borrower in the same manner that a creditor who fails to comply with any requirement under this chapter is liable to a person under section 130. A creditor or assignee that is connected to a mortgage serviced by a servicer that fails to comply with any requirement imposed under this section shall, with respect to that mortgage, have joint and several liability with such servicer for such failure to comply. . The table of contents of chapter 2 of such Act is amended by inserting after the item relating to section 129H the following new item: 129I. Standards for servicers of residential mortgages. .
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