HR 4135
110th CONGRESS
1st Session
H. R. 4135
To establish the Family Foreclosure Rescue Corporation to provide
emergency relief to refinance home mortgages of homeowners in foreclosure
or default.
IN THE HOUSE OF REPRESENTATIVES
November 9, 2007
Mr. BACA introduced the following bill; which was referred to the Committee
on Financial Services
A BILL
To establish the Family Foreclosure Rescue Corporation to provide
emergency relief to refinance home mortgages of homeowners in foreclosure
or default.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Family Foreclosure Rescue Corporation Act'.
SEC. 2. PURPOSES.
The purposes of this Act are to provide emergency relief with respect
to home mortgage indebtedness through the establishment of a corporation
to directly refinance home mortgages to homeowners currently in foreclosure,
serious default, or with a reasonable expectation of imminent, sustained
default and--
(1) to extend relief to the owners of homes occupied by them and who
are unable to amortize their debt elsewhere, including those homeowners
whose outstanding mortgage indebtedness exceeds the value of their home
due to recent declines in the housing market;
(2) to provide necessary funds for refinancing without reliance on liquidity
and credit availability in private markets;
(3) to stabilize neighborhoods by reducing foreclosures and the downward
impact on house prices created by the threat of widespread foreclosure;
(4) to encourage loan originators and servicers to modify the terms
of existing non-performing loans to obligations that borrowers can reasonably
repay;
(5) to provide mortgage assistance in an efficient manner at minimal
to no cost to the taxpayer, with corporate profits returned to the Treasury
of the United States; and
(6) to minimize the impacts of the current mortgage crisis on the broader
economy.
SEC. 3. DEFINITIONS.
For purposes of this Act, the following definitions shall apply:
(1) CORPORATION- The term `Corporation' means the Family Foreclosure
Rescue Corporation established under section 4.
(2) BOARD- The term `Board' means the Board of Directors of the Corporation.
(3) HOME MORTGAGE- The term `home mortgage' means a first mortgage on
real estate--
(A)(i) in fee simple, upon which there is located a dwelling for not
more than four families;
(ii) on a leasehold under a renewable lease for not less than 99 years,
upon which there is located a dwelling for not more than four families;
or
(iii) that is a single unit in a condominium; and
(B) has a value not exceeding the lower of--
(i) 125 percent of the local area median home price; or
(ii) 175 percent of the dollar amount limitation for a single-family
residence then in effect under section 305(a)(2) of the Federal
Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) .
(4) SECRETARY- The term `Secretary' means the Secretary of the Treasury.
SEC. 4. ESTABLISHMENT.
The Secretary of the Treasury shall establish a corporation to be known
as the Family Foreclosure Rescue Corporation, which shall be an instrumentality
of the United States, and which shall have authority to sue and to be
sued in any court of competent jurisdiction, Federal or State.
SEC. 5. BOARD.
(a) In General- The Corporation shall be under the direction of a Board
of Directors and shall be operated by the Board under such bylaws, rules,
and regulations as the Board may prescribe for the accomplishment of the
purposes and intent of this Act.
(b) Members- The Board shall consist of seven members, as follows:
(1) Two of the members shall be appointed by the President.
(2) Four of the members shall be appointed by President from among a
list of 10 nominees selected jointly by the Speaker of the House of
Representatives and the majority leader of the Senate.
(3) The Secretary shall serve as an ex officio member of the Board.
SEC. 6. CAPITAL STOCK.
(a) In General- The Corporation shall have capital stock subscribed to
by the Secretary on behalf of the United States Government in such amount
as the Secretary may determine to be appropriate, to the extent provided
in advance in an appropriation Act for any fiscal year, but not to exceed
in the aggregate $200,000,000.
(b) Certificates- Certificates evidencing shares of nonvoting capital
stock of the Corporation shall be issued by the Corporation to the Secretary,
to the extent of payments made for the capital stock of the Corporation.
(c) Public Debt Transaction- For the purpose of purchasing shares of capital
stock of the Corporation, the Secretary may use as a public-debt transaction
the proceeds of any securities issued under chapter 31 of title 31, United
States Code.
SEC. 7. BORROWING.
(a) Issuance- The Corporation may issue bonds in an aggregate amount not
to exceed $150,000,000,000, which may be sold by the Corporation to obtain
funds for carrying out the purposes of this Act, or exchanged as hereinafter
provided. Such bonds shall be issued in such denominations as the Board
shall prescribe, shall mature within a period of not more than 30 years
from the date of their issue, shall bear interest at a rate not to exceed
5 percent annually, and shall be fully and unconditionally guaranteed
as to principal and interest by the United States, and such guaranty shall
be expressed on the face thereof.
(b) Payment- The Corporation shall make bond payments of accrued interest
plus principal in the amount sufficient to return the principal within
a period not to exceed 30 years, and such payments may be made monthly,
quarterly, semi-annually, or annually, in the discretion of the Corporation.
Outstanding principal and accrued interest shall be paid to the bond holder
in the event that the mortgage issued in exchange for that bond is paid
off or title to the underlying property is transfered by sale or foreclosured.
(c) Treasury Borrowing- In the event that the Corporation is unable to
pay upon demand, when due, the interest on any such bonds, the Secretary
shall pay to the Corporation the amount of such interest, which is hereby
authorized to be appropriated to the Corporation, and the Corporation
shall pay the amount of such interest to the holders of the bonds. Upon
the payment of such interest by the Secretary, the amount so paid shall
become an obligation of the Corporation to the United States and shall
bear interest at the same rate as that borne by the bonds upon which the
interest has been so paid.
(d) Treatment- The bonds issued by the Corporation under this section
shall be exempt, both as to principal and interest, from all taxation
(except surtaxes, estate, inheritance, and gift taxes) now or hereafter
imposed by the United States or any District, Territory, dependency, or
possession thereof, or by any State, county, municipality, or local taxing
authority.
SEC. 8. TREATMENT OF CORPORATION.
The Corporation, including its franchise, its capital, reserves, and surplus,
and its loans and income, shall be exempt from taxation referred to in
section 7(c), except that any real property of the Corporation shall be
subject to taxation to the same extent, according to its value, as other
real property is taxed.
SEC. 9. EMERGENCY MORTGAGE RELIEF.
(a) Acquisition of Mortgages- The Corporation may, during the three-year
period that begins upon the date of the enactment of this Act--
(1) acquire in exchange for bonds issued by the Corporation, home mortgages
and other obligations and liens secured by real estate (including the
interest of a vendor under a purchase-money mortgage or contract) recorded
or filed in the proper office or executed prior to the date of the enactment
of this Act, which are currently in default or at foreseeable risk of
default, except that--
(A) in the event that the home mortgage was placed in a trust or other
qualified special purpose vehicle for the purposes of securitization,
acceptance of Corporation bonds by a duly appointed servicer as payment
in full for the purchase of the home mortgage shall be construed as
a non-foreclosure alternative to the termination of a loan, equivalent
to a short sale or short payoff;
(B) the face value of the bonds so exchanged and the cash so advanced
shall not exceed, in any case, the principal balance plus accrued
interest on that balance (exclusive of additional fees incurred as
part of lender workouts and similar actions), as of the time of acquisition
by the Corporation, as determined by an appraisal made by the Corporation;
and
(C) in any case in which the amount of the face value of the bonds
exchanged plus accrued interest thereon and the cash advanced is less
than the amount the homeowner owes with respect to the home mortgage
or other obligation or lien so acquired by the Corporation, the Corporation
shall credit the difference between such amounts to the homeowner
and shall reduce the amount owed by the homeowner to the Corporation,
to that extent; and
(2) in connection with any such exchange, make advances in cash to pay
the taxes and assessments on the real estate, to meet the incidental
expenses of the transaction, and to pay such amounts, not exceeding
$750, to the holder of the mortgage, obligation, or lien acquired as
may be the difference between the face value of the bonds exchanged
and the purchase price of the mortgage, obligation, or lien;
(b) Amortization- Each home mortgage or other obligation or lien so acquired
shall be carried as a first lien or refinanced as a home mortgage by the
Corporation on the basis of the price paid for the mortgage, obligation,
or lien by the Corporation, and shall be amortized by means of monthly
payments sufficient to retire the interest and principal within a period
of not to exceed 30 years; but the amortization payments of any homeowner
may be made quarterly, semiannually, or annually, if in the judgment of
the Corporation the situation of the homeowner requires it.
(c) Maximum Interest Rate- Interest on the unpaid balance of the obligation
of the homeowner to the Corporation shall be at a rate not exceeding 7.5
percent annually.
(d) Extensions- The Corporation may at any time grant an extension of
time to any homeowner for the payment of any installment of principal
or interest owed by the homeowner to the Corporation if, in the judgment
of the Corporation, the circumstances of the homeowner and the condition
of the security justify such extension.
(e) Redemption and Recovery of Foreclosed Properties- The Corporation
may, during the three-year period described in subsection (a), exchange
bonds and advance cash subject to the limitations provided in subsection
(a), to redeem or recover homes lost by the owners by foreclosure or forced
sale by a trustee under a deed of trust or under power of attorney, or
by voluntary surrender to the mortgagee within two years prior to such
exchange or advance.
(f) Real Estate- As used in this section, the term `real estate' includes
only real estate described in section 3(3).
SEC. 10. NONDISCRIMINATION.
(a) Location of Real Estate- No discrimination shall be made under this
Act against any home mortgage by reason of the fact that the real estate
securing such mortgage is located in a municipality, county, or taxing
district which is in default upon any of its obligations.
(b) Characteristics of Applicants- The Corporation is prohibited from
discriminating in its lending behavior based on the race, color, religion,
sex, national origin, age, disability, or familial status of the applicant
or applicants.
SEC. 11. DENIAL OF APPLICATIONS.
(a) Authority To Deny- The Corporation may deny a home mortgage application
on the grounds of an applicant's inability to pay or excess indebtedness,
as determined by credit score, household income and assets, or other criteria,
to be determined by the Board or its designees.
(b) Counseling- The Corporation shall provide applicants who are denied
a home mortgage issued by the Corporation information sufficient to identify
and contact a housing counseling provider serving the local area in which
the applicant resides who has been certified pursuant to section 106(f)
of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(f)).
SEC. 12. DISPOSITION OF REAL ESTATE.
In the event the Corporation takes possession of real estate through foreclosure,
voluntary transfer of title, or otherwise, the Corporation shall dispose
of the real estate in a manner that minimizes adverse impacts on neighboring
property values by staggering sales so as not to create an excess supply
of properties for sale or by offering properties for rent until disposition
is possible. The Corporation may make necessary repairs to Corporation-owned
property to maintain the value of the property and to prepare it for disposition.
SEC. 13. APPRAISALS.
The Board shall make rules for the appraisal of the property on which
loans are made under this Act, to accomplish the purposes of this Act.
SEC. 14. OTHER PROVISIONS.
(a) Officers and Employees- The Corporation shall have power to select,
employ, and fix the compensation of such officers, employees, attorneys,
or agents as shall be necessary for the performance of its duties under
this Act, without regard to the provisions of other laws applicable to
the employment or compensation of officers, employees, attorneys, or agents
of the United States. No such officer, employee, attorney, or agent shall
be paid compensation at a rate in excess of the rate provided for the
members of the Board.
(b) Use of Mails- The Corporation may use the United States mails in the
same manner and under the same conditions as other departments and agencies
of the United States.
(c) Salaries and Expenses- The Corporation shall pay such proportion of
the salary and expenses of the members of the Board and of its officers
and employees as the Board may determine to be equitable, and may use
the facilities of Federal Home Loan Banks, upon making reasonable compensation
for such use, as determined by the Board.
(d) Bylaws, Rules, and Regulations- The Board may make such bylaws, rules
and regulations, not inconsistent with the provisions of this Act, as
may be necessary for the proper conduct of the affairs of the Corporation.
(e) Retirement of Stock- The Corporation shall retire and cancel the bonds
and stock of the Corporation as rapidly as the resources of the Corporation
will permit. Upon the retirement of such stock, the reasonable value thereof
as determined by the Board shall be paid into the Treasury of the United
States and the receipts issued therefor shall be canceled.
SEC. 15. LIQUIDATION.
The Board shall proceed to liquidate the Corporation when its purposes
have been accomplished, and shall pay any surplus or accumulated funds
into the Treasury of the United States. The Corporation may declare and
pay such dividends to the United States as may be earned and as in the
judgment of the Board it is proper for the Corporation to pay.
END
