Sec. 103. Conditions for the sale of real estate-owned properties and non-performing loans

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Congress finds that— the Federal Housing Administration, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation provide critical homeownership opportunities that greatly benefit individuals, families and communities; and it is the purpose of this section to— preserve owner-occupied homes with mortgages insured by the Federal Housing Administration or purchased by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation for continued use as owner-occupied homes; and direct that, upon the sale of those properties or transfer of those mortgages, certain percentages of those properties are sold to low- and moderate-income homeowners.

Title II of the National Housing Act ( 12 U.S.C. 1707 et seq.) is amended by adding at the end the following: Not later than 1 year after the date of enactment of this section, the Secretary shall develop programs within the Federal Housing Administration to ensure that not less than 75 percent of the single-family residential properties that were acquired by the Federal Housing Administration through foreclosure or other transfer-related mortgages insured under this title on the properties are sold— directly to an owner-occupant; or to community partners that will— rehabilitate or develop the property; and sell the property to an owner-occupant.

Unless the Secretary provides prior approval, the Secretary shall prohibit any purchaser of a real estate-owned property of the Federal Housing Administration from re-selling the property within 15 years of purchase using a land installment contract or through any other mechanism that does not transfer title to the buyer at the time of sale. Except as provided in this section, the Secretary may not sell or transfer any mortgage insured under this title that is secured by a single-family residential property (in this section referred to as a covered mortgage ).

The Secretary— may sell or transfer a covered mortgage only if— the capital level of the Fund is substantially below the capital ratio required under section 205(f)(4); the Secretary certifies that other reasonable measures are not available to restore the Fund to that capital ratio; and the Secretary complies with paragraph (2)(C), if applicable; and shall sell or transfer only such covered mortgages as are necessary to assist in restoration of that capital ratio. If the Secretary intends to sell or transfer a covered mortgage, the Secretary shall provide the current borrower and all owners of record of the property securing the covered mortgage, or require that the current borrower and owners of record be provided, a separate written notice of the intent to sell the covered mortgage that— is mailed via certified and first class mail not less than 90 days before the date on which the loan is included in any proposed sale; and includes— a description of the loss mitigation options of the Administration that are available to borrowers in financial distress and the obligation of servicers to consider borrowers in default for those options; a description of the actions that the servicer of the loan has taken to review and implement those options for the borrower; and a description of the procedures the borrower may use to contest with the Secretary the compliance by the servicer with that obligation.

The determination of the Secretary to authorize the sale of a mortgage insured under this title shall be reviewable under chapter 7 of title 5, United States Code, for abuse of discretion and arbitrary and capricious agency action. The Secretary may not sell any covered mortgage through any type of non-performing loan sale auction program until the Secretary issues rules, through the notice and comment rule making procedures under section 553 of title 5, United States Code, that address essential aspects of any non-performing loan sale program, including— the method of selection of loans for sale; notice to borrowers prior to inclusion of the loan in a sale; and review of loss mitigation status prior to the sale, selection of eligible bidders, loss mitigation guidelines applicable to loan purchasers, and reporting requirements for purchasers.

As a condition to payment of an insurance claim under this title in connection with any non-performing loan sale, the lender or servicer of the loan shall provide the Secretary and the borrower with written certification of the loss mitigation review contained in the FHA Single Family Housing Policy Handbook 4000.1, or any successor handbook. Any false statement provided in a certification described in subparagraph

(A)shall be a basis for— recovery by the Secretary of any amounts paid under the insurance claim and any other penalties and sanctions authorized under Federal law; and a private right of action by the borrower against the lender and servicer, with remedies to include compensatory and punitive damages and an assessment of costs and attorney's fees. Unless a bona fide purchaser has acquired title to the property as a primary residence— a certification described in subparagraph

(A)that contains a false statement shall be a basis for revoking the transfer of the property; and the pre-sale lender and servicer of the property shall— resume servicing the loan as a loan insured under this title; and reimburse the Secretary for any insurance claim paid and all costs related to the sale of the property. Each purchaser of a covered mortgage shall offer the borrower on the covered mortgage— appropriate loss mitigation options, including affordable and sustainable loan modifications; and the opportunity for a short sale or a deed in lieu of foreclosure. The specific formula, calculations, waterfall steps, and other terms for appropriate loss mitigation options described in subparagraph

(A)shall be published by the Secretary, made available to the public, and included in a written notice given to borrowers before any acceleration or foreclosure is initiated after a loan sale. With respect to a transferee, including any subsequent transferee, of a covered mortgage that is sold under this title— the transferee shall certify in writing to the Secretary that the transferee will comply with the provisions of this section in the marketing and transfer of any property received in the disposition of any transferred loan; the transferee shall provide to the Secretary records documenting that the transfers of those properties are in compliance with this section; and the failure of the Secretary or the transferee to comply with the requirements under this section for a loan in default shall be a defense to foreclosure, and a transferee shall not execute a foreclosure judgment or order of sale, or conduct a foreclosure sale, until the transferee has complied with all requirements under this section. With respect to covered mortgages that are sold under this title and foreclosed upon by the buyer, not less than 90 percent of the properties that are the subject of the covered mortgages in an auction shall be— sold to owner-occupants; operated or transferred to an entity that will operate the property as affordable rental housing for households below 80 percent of the area median income for a period of not less than 15 years; or transferred or donated to a nonprofit agency that is certified by the Secretary and will redevelop the property for owner occupancy or affordable rental housing. The Secretary shall implement policies, procedures, and controls to— identify and recruit community partners; engage in consultations with community partners before the sale of a pool of covered mortgages under this title to determine whether that sale can be designed to meet the specific needs of the communities served by the community partners; and prioritize the sale of pools of single-family mortgages to community partners by— designing pools of covered mortgages for direct sale to a community partner, the price of which shall be set by the Secretary based on a pricing model that considers— the current fair market value of the properties; and the potential impact of foreclosures on those properties to the value of other homes that secure mortgages insured under this title in the same census tract; or in the case of an auction, if the winning bid is not from a community partner, permitting any community partner that bid during that same auction to have a final opportunity to enter a higher bid on the pool. . Section 302 of the Federal National Mortgage Association Charter Act ( 12 U.S.C. 1717 ) is amended by adding at the end the following: The corporation may not sell or transfer any mortgage that is secured by a single-family residential property (in this section referred to as a covered mortgage ) under this section unless the requirements of this subsection are met. If the corporation intends to sell or transfer a covered mortgage, the corporation shall provide the current borrower and all owners of record of the property securing the covered mortgage, or require that the current borrower and owners of record be provided, a separate written notice of the intent to sell the covered mortgage that— is mailed via certified and first class mail not less than 90 days before the date on which the loan is included in any proposed sale; and includes— a description of the loss mitigation options of the corporation that are available to borrowers in financial distress and the obligation of servicers to consider borrowers in default for those options; a description of the actions that the servicer of the loan has taken to review and implement those options for the borrower; and a description of the procedures the borrower may use to contest with the corporation the compliance by the servicer with that obligation. The determination of the corporation to authorize the sale of a mortgage under this section shall be reviewable under chapter 7 of title 5, United States Code, for abuse of discretion and arbitrary and capricious agency action. The corporation may not sell any covered mortgage through any type of non-performing loan sale auction program until the corporation issues rules, through the notice and comment rule making procedures under section 553 of title 5, United States Code, that address essential aspects of any non-performing loan sale program, including— the method of selection of loans for sale; notice to borrowers prior to inclusion of the loan in a sale; and review of loss mitigation status prior to the sale, selection of eligible bidders, loss mitigation guidelines applicable to loan purchasers, and reporting requirements for purchasers. Each purchaser of a covered mortgage shall offer the borrower on the covered mortgage— appropriate loss mitigation options, including affordable and sustainable loan modifications; and the opportunity for a short sale or a deed in lieu of foreclosure. The specific formula, calculations, waterfall steps, and other terms for appropriate loss mitigation options described in subparagraph

(A)shall be published by the corporation, made available to the public, and included in a written notice given to borrowers before any acceleration or foreclosure is initiated after a loan sale. With respect to a transferee, including any subsequent transferee, of a covered mortgage that is sold by the corporation under this section— the transferee shall certify in writing to the corporation that the transferee will comply with the provisions of this subsection in the marketing and transfer of any property received in the disposition of any transferred loan; the transferee shall provide to the corporation records documenting that the transfers of those properties are in compliance with this subsection; and the failure of the corporation or the transferee to comply with the requirements under this subsection for a loan in default shall be a defense to foreclosure, and a transferee shall not execute a foreclosure judgment or order of sale, or conduct a foreclosure sale, until the transferee has complied with all requirements under this subsection. With respect to covered mortgages that are sold by the corporation under this section and foreclosed upon by the buyer, not less than 90 percent of the properties that are the subject of the covered mortgages in an auction shall be— sold to owner-occupants; operated or transferred to an entity that will operate the property as affordable rental housing for households below 80 percent of the area median income for a period of not less than 15 years; or transferred or donated to a nonprofit agency that is certified by the corporation and will redevelop the property for owner occupancy or affordable rental housing. The corporation shall implement policies, procedures, and controls to— identify and recruit community partners; engage in consultations with community partners before the sale of a pool of covered mortgages under this section to determine whether that sale can be designed to meet the specific needs of the communities served by the community partners; and prioritize the sale of pools of single-family mortgages to community partners by— designing pools of covered mortgages for direct sale to a community partner, the price of which shall be set by the corporation based on a pricing model that considers— the current fair market value of the properties; and the potential impact of foreclosures on those properties to the value of other homes in the same census tract; or in the case of an auction, if the winning bid is not from a community partner, permitting any community partner that bid during that same auction to have a final opportunity to enter a higher bid on the pool. . Section 305 of the Federal Home Loan Mortgage Corporation Act ( 12 U.S.C. 1454 ) is amended by adding at the end the following: The Corporation may not sell or transfer any mortgage that is secured by a single-family residential property (in this section referred to as a covered mortgage ) under this section unless the requirements of this subsection are met. If the Corporation intends to sell or transfer a covered mortgage, the Corporation shall provide the current borrower and all owners of record of the property securing the covered mortgage, or require that the current borrower and owners of record be provided, a separate written notice of the intent to sell the covered mortgage that— is mailed via certified and first class mail not less than 90 days before the date on which the loan is included in any proposed sale; and includes— a description of the loss mitigation options of the Corporation that are available to borrowers in financial distress and the obligation of servicers to consider borrowers in default for those options; a description of the actions that the servicer of the loan has taken to review and implement those options for the borrower; and a description of the procedures the borrower may use to contest with the Corporation the compliance by the servicer with that obligation. The determination of the Corporation to authorize the sale of a mortgage under this section shall be reviewable under chapter 7 of title 5, United States Code, for abuse of discretion and arbitrary and capricious agency action. The Corporation may not sell any covered mortgage through any type of non-performing loan sale auction program until the Corporation issues rules, through the notice and comment rule making procedures under section 553 of title 5, United States Code, that address essential aspects of any non-performing loan sale program, including— the method of selection of loans for sale; notice to borrowers prior to inclusion of the loan in a sale; and review of loss mitigation status prior to the sale, selection of eligible bidders, loss mitigation guidelines applicable to loan purchasers, and reporting requirements for purchasers. Each purchaser of a covered mortgage shall offer the borrower on the covered mortgage— appropriate loss mitigation options, including affordable and sustainable loan modifications; and the opportunity for a short sale or a deed in lieu of foreclosure. The specific formula, calculations, waterfall steps, and other terms for appropriate loss mitigation options described in subparagraph

(A)shall be published by the Corporation, made available to the public, and included in a written notice given to borrowers before any acceleration or foreclosure is initiated after a loan sale. With respect to a transferee, including any subsequent transferee, of a covered mortgage that is sold by the Corporation under this section— the transferee shall certify in writing to the Corporation that the transferee will comply with the provisions of this section in the marketing and transfer of any property received in the disposition of any transferred loan; the transferee shall provide to the Corporation records documenting that the transfers of those properties are in compliance with this subsection; and the failure of the Corporation or the transferee to comply with the requirements under this subsection for a loan in default shall be a defense to foreclosure, and a transferee shall not execute a foreclosure judgment or order of sale, or conduct a foreclosure sale, until the transferee has complied with all requirements under this subsection. With respect to covered mortgages that are sold by the Corporation under this section and foreclosed upon by the buyer, not less than 90 percent of the properties that are the subject of the covered mortgages in an auction shall be— sold to owner-occupants; operated or transferred to an entity that will operate the property as affordable rental housing for households below 80 percent of the area median income for a period of not less than 15 years; or transferred or donated to a nonprofit agency that is certified by the Corporation and will redevelop the property for owner occupancy or affordable rental housing. The Corporation shall implement policies, procedures, and controls to— identify and recruit community partners; engage in consultations with community partners before the sale of a pool of covered mortgages under this section to determine whether that sale can be designed to meet the specific needs of the communities served by the community partners; and prioritize the sale of pools of single-family mortgages to community partners by— designing pools of covered mortgages for direct sale to a community partner, the price of which shall be set by the Corporation based on a pricing model that considers— the current fair market value of the properties; and the potential impact of foreclosures on those properties to the value of other homes in the same census tract; or in the case of an auction, if the winning bid is not from a community partner, permitting any community partner that bid during that same auction to have a final opportunity to enter a higher bid on the pool. .

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Sec. 103

Conditions for the sale of real estate-owned properties and non-performing loans

U.S.C.§ 1707

U.S.C.§ 1717

U.S.C.§ 1454

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