Sec. 3. Sale of Fannie Mae and Freddie Mac non-performing loans
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The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 ( 12 U.S.C. 4501 et seq. ) is amended by inserting after section 1328 ( 12 U.S.C. 4548 ) the following: An enterprise may not conduct bulk auctions or other group sales of single family non-performing residential loans unless the following requirements are met: The enterprise establishes a system that provides priority to Federal, State, local, or Tribal governments or nonprofit organizations that have the capacity and experience required for buying, servicing, and resolving single family mortgage loans in a manner that promotes affordable housing, fair housing, affordable homeownership, provision of housing counseling, or neighborhood stabilization.
Applicable loss mitigation is exhausted before a loan may be placed into the bulk auction or group sale. Clear, written notice is sent by the enterprise or servicer through certified and first-class mail to the borrower and all owners of record, with a copy sent to the enterprise if sent by the servicer, not less than 90 days before the inclusion of the loan in any proposed sale— stating that the loan will be included in a bulk auction or group sale of non-performing loans; and describing the bulk auction or group sale process, including— the loss mitigation or other protections available to the borrower and other owners of record both before and after the auction or sale; the status of any loss mitigation actions offered by the mortgagee with respect to the loan, including decisions on all loss mitigation reviews, descriptions of any loss mitigation options offered or denied, and supporting documentation for the most recent evaluation; and the obligations of the servicer of the loan before and after the auction or sale, including loss mitigation requirements.
The enterprise requires in the terms of the bulk auction or group sale that purchasers take loans subject to the following requirements: The purchaser is required to provide loss mitigation options to all eligible borrowers that offer terms and protections at least as favorable as those available under loss mitigation guidelines of the enterprise, including the absence of fees for loss mitigation and loan modifications that reduce payments to an affordable level. The purchaser is required to provide written, public disclosure of post-sale loss mitigation options that the purchaser makes available to eligible borrowers.
Failure by the purchaser to follow the established loss mitigation guidelines shall serve as a defense to a judicial foreclosure and a basis to enjoin or otherwise stay a non-judicial foreclosure. Data reporting as provided under subsection (b)(2). If a property becomes vacant, the purchaser shall not release the lien until the property is sold or donated. Use of contract for deed, lease to own, or a land installment contract to sell or otherwise transfer any property that is secured by a purchased loan shall be prohibited unless the tenant or purchaser is a nonprofit organization without obtaining prior permission from the enterprise.
For all non-performing loans where a home-retention loss mitigation option is not possible and the purchaser acquires the property through foreclosure sale, 75 percent of those properties shall be— sold at the current fair market value to an owner-occupant; sold or donated to a nonprofit or local government entity that will commit to 1 of the outcomes described in clause
(i)or (iii); for not less than the 10-year period beginning on the date on which any entity initially leases the property, and with respect to any new lease beginning within such 10-year period, leased to a tenant with an income that is not more than 100 percent of the area median income at the time the tenant initially leases the property, with monthly rents that are not more than 30 percent of the monthly household income, provided that the property owner accepts as rental payment any legal source of income, including— a housing voucher under section 8 of the United States Housing Act of 1937 ( 42 U.S.C. 1437f ) and any form of Federal, State, or local housing assistance provided to a person or family or provided to a housing owner on behalf of a person or family, including— rental vouchers; rental assistance; rental subsidies from nongovernmental organizations; and homeownership subsidies; income received as a monthly benefit under title II of the Social Security Act ( 42 U.S.C. 401 et seq. ), as a supplemental security income benefit under title XVI of the Social Security Act ( 42 U.S.C. 1381 et seq. ), or as a benefit under the Railroad Retirement Act of 1974 ( 45 U.S.C. 231 et seq. ), including any such benefit to which the individual is entitled for which payment is made to a representative payee; income received by court order, including spousal support and child support; any payment from a trust, guardian, conservator, cosigner, or relative; and any other lawful source of income or funds, including savings accounts and investments; or for any property that is not habitable, demolished or donated to a land bank with a cash donation to cover demolition costs. The enterprise maintains vacant and abandoned property until such time as title is transferred to a nonprofit organization or the property is sold to a bona fide third-party purchaser. During the 4-year period following any auction or sale of single family non-performing residential mortgage loans under subsection (a), the Director shall require the enterprise to collect from each purchaser of such loans, including any subsequent purchaser of a loan, quarterly loan-level data regarding the treatment and outcome of the loan, including— loan characteristics, including loan type, remaining loan term, loan to value ratio, number of months in arrears, loss mitigation status, and foreclosure status at time of sale; loss mitigation data, including whether loss mitigation was provided by the purchaser, debt-to-income ratio and percent payment reduction for any modified loans, foreclosures begun or completed, and performance of modified loans; demographic data for each borrower and any co-borrower, including race, national origin, sex, ZIP Code, and census tract, and, if available, disability status and veteran status; and other purchaser actions, including charge offs and resales of loans and dates for such actions. The Director shall submit to Congress, and make publicly available at no cost to the public in a readily accessible format on the website of the Agency, semi-annual reports on— loans sold in an auction or sale under subsection
(a)by each enterprise, disaggregated by pool, including— the number of loans and types of loans; mean and median delinquency and loan to value ratios at the time of the sale; the number and percentage of owner-occupied properties; the number and percentage of loans modified prior to auction or sale; the number and percentage of loans in foreclosure proceedings at the time of auction or sale; and demographic and geographic data, including property locations by census tract or larger geographic location if necessary to protect personally identifiable information; the performance of loans after an auction or sale under subsection (a), disaggregated by loan pool, including the initial purchaser, current owner, current servicer, data summarizing any alternatives to foreclosure offered and enacted, and data summarizing the data collected under subparagraph (A); and the results of a fair lending analysis conducted based on the data in subparagraphs
(A)and
(B)to identify any discriminatory impacts or outcomes associated with the auctions or sales. The enterprises may— forcibly retain loans or properties, without providing compensation, from purchasers that do not meet the requirements under subsection (a)(4); and enact additional penalties for purchasers described in paragraph
(1)that the Director determines have repeatedly not complied with the requirements under subsection (a)(5), including monetary penalties and prohibition from participating in sales under this section. The Director shall issue regulations defining the terms of permissible auctions or sales in accordance with the requirements in this section. .
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Sec. 3
Sale of Fannie Mae and Freddie Mac non-performing loans
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