National Homeowners Bill of Rights Act of 2017

“(n) Servicer treatment of borrowers

“(1) Servicer requirements

“(A) Single electronic record and single point of contact—Each servicer of a federally related mortgage loan, or agents of such servicer, shall, with respect to the borrower, establish a single electronic record for each account, the contents of which shall be accessible throughout the servicer, or agents of such servicer, including to all affordable loan modification staff, all foreclosure staff, and all bankruptcy staff.

“(B) Availability of net present value information—Servicers shall maintain a free and publicly accessible website where borrowers may check their estimated net present value.

“(2) Protections for homeowners with limited English proficiency

“(A) Free oral interpretation—Servicers shall provide free oral interpretation services for borrowers whose files include a notation of a preferred language other than English or who request such services and such services may be provided by contracting with housing counseling agencies that are approved by the Department of Housing and Urban Development and that have appropriate language capacity. The servicer shall ensure that the person providing the oral interpretation services has specific knowledge of loss mitigation and mortgage terms.

“(B) Notification of available assistance

“(i) In general—Servicers shall provide each borrower with a notice—

“(I) stating that the borrower may receive assistance in a language other than English; and

“(II) containing information on how to request such assistance.

“(ii) Form of notice—The Bureau may issue regulations to provide for the form, content, and manner of service of the notice described under clause (i).

“(iii) Notice on transfer—Each transferee servicer to whom the servicing of any federally related mortgage loan is assigned, sold, or transferred shall include the notice required under this paragraph in the notice required under subsection (c).

“(C) Notation in file—Servicers shall—

“(i) note a request for translation services in the borrower’s file and make such note available to all relevant servicer personnel; and

“(ii) note in the borrower’s file any time the borrower has communicated or sought to communicate with the servicer in a language other than English, and shall include such other language.

“(D) Translated documents

“(i) Providing documents

“(I) In general—Servicers shall, if a borrower asks for translated documents or if the borrower’s file contains a notation that the borrower has a language preference other than English or if the borrower has already requested oral interpretation services, provide key documents to the borrower translated into the language of the borrower, including—

“(aa) periodic statements;

“(bb) affordable loan modification applications, including hardship affidavits;

“(cc) denial notices;

“(dd) loan modification offers, including any trial period plan; and

“(ee) such other documents as the Bureau may determine appropriate.

“(II) Exception—Subclause (I) shall only require providing documents in—

“(aa) commonly spoken languages in the United States, as determined by the Bureau; and

“(bb) with respect to a particular servicer, languages spoken by a significant number of individuals living in any markets in which the servicer does business, as determined by the Bureau.

“(III) Bureau consideration of census data—In making determinations under this clause, the Bureau shall take into consideration data from the Bureau of the Census on percentages of individuals who reported they speak English less than “very well”.

“(ii) Accepting documents—Servicers shall only be required to accept documents in languages in which the servicer already provides documents, that are considered to be part of routine business transactions in the market in which the mortgage loan was made, or that are used in documents provided to the public by any department or agency of the Federal Government.

“(iii) Exception—Clause (i) shall not apply to small servicers, as defined under section 1026.41(e)(4)(ii) of title 12, Code of Federal Regulations.

“(iv) Development of glossary of terms—The Bureau shall develop a glossary of mortgage loan and loss mitigation terms in each commonly spoken language in the United States, and make such glossary available to servicers and the public.

“(E) Continuing requirement—Once a servicer has begun to communicate with a borrower in a particular language, the servicer shall continue to communicate with the borrower in that language unless otherwise requested by the borrower.

“(3) Requirements during affordable loan modification process

“(A) Borrowers facing imminent default—Servicers shall evaluate a borrower facing imminent default (as such term is defined by the Bureau), as well as those in default, for affordable loan modification assistance, as described in this subsection.

“(B) Assistance to borrowers

“(i) Assistance in applying for affordable loan modification—Servicers shall—

“(I) have available and sufficient staff to answer questions borrowers may have about filling out documents; and

“(II) provide borrowers a list of nonprofit legal services organizations and housing agencies approved by the Department of Housing and Urban Development, that can assist the borrowers with documents.

“(ii) Treatment of successors in interest—Servicers shall—

“(I) provide full information and complete loss mitigation options to successor homeowners protected from an acceleration of a mortgage loan under the Garn-St Germain Depository Institutions Act of 1982, if requested by the successor homeowner; and

“(II) review a mortgage loan for loss mitigation, as though the successor homeowner was the borrower, and provide a decision on available loss mitigation prior to an assumption of the mortgage loan, if requested by the succeeding homeowner.

“(C) Simultaneous review for all loss mitigation options—A servicer shall simultaneously evaluate a borrower for all available loss mitigation options, including an affordable loan modification.

“(D) Rule of construction—Nothing in this subsection shall be construed as prohibiting a servicer from considering a borrower for other loss mitigation options, so long as the servicer first offers the borrower an affordable loan modification if the borrower is eligible for such a modification.

“(E) Requirements related to transfer of loans

“(i) In general—For any transfer of servicing to a successor servicer of a federally related mortgage loan or subservicer, the transferring servicer shall—

“(I) inform the successor servicer (including a subservicer) whether a loan modification request is pending;

“(II) provide the successor servicer with all documentation related to the mortgage loan, including any documentation relating to a loan modification or loss mitigation process;

“(III) ensure that the successor servicer has the operational capacity to manage the transferred loan;

“(IV) ensure that the successor servicer shall accept and continue processing prior loan modification requests, by including such requirement in the agreement made between the servicers when transferring the loan;

“(V) ensure that successor servicer shall honor trial and permanent loan modification agreements entered into by the transferring servicer by including such requirement in the agreement made between the servicers when transferring the loan; and

“(VI) notify the borrower of the transferred loan that the new servicer is required to accept and continue processing prior loan modification requests, if any, and is required to honor trial and permanent loan modification agreements entered into by the transferring servicer, if any.

“(ii) Honoring of existing loan modifications and applications in process—The successor servicer shall agree to honor and accept any existing loan modification and continue any loan modification applications.

“(iii) Prohibition on foreclosure—During the 60-day period beginning on the effective date of transfer of the servicing of any federally related mortgage loan, the mortgage loan subject to such transfer may not be subject to initiation of a judicial or nonjudicial foreclosure or be subject to a foreclosure sale.

“(4) Subsequent applications for affordable loan modification—If a borrower has submitted an application or request in the past, the servicer shall allow such borrower to make a subsequent affordable loan modification application if the borrower experiences a material change in circumstances, as defined by the Bureau.

“(5) Limitation on foreclosure proceedings

“(A) Halt to foreclosure and cancellation of scheduled sale pending application

“(i) In general—If a borrower submits an initial application for affordable loan modification assistance more than 7 business days before a scheduled foreclosure sale, the servicer must stop and cancel the foreclosure sale and may not continue a nonjudicial foreclosure or a judicial foreclosure against the mortgagor.

“(ii) Treatment if no foreclosure has been initiated—For purposes of clause (i), if no foreclosure has been initiated at the time of a mortgagor’s initial application for affordable loan modification assistance, then an initial application is deemed to have been submitted more than 7 business days before a scheduled foreclosure sale.

“(iii) Treatment if a foreclosure has been initiated but no sale scheduled—For purposes of clause (i), if a foreclosure has been initiated at the time of the mortgagor’s initial application for affordable loan modification assistance, but a foreclosure sale has not been scheduled, then an initial application is deemed to have been submitted more than 7 business days before a scheduled foreclosure sale.

“(B) Foreclosure proceedings permitted—Notwithstanding subparagraph (A), a servicer may initiate or continue a judicial or nonjudicial foreclosure under State law against a borrower, if—

“(i) the servicer—

“(I) determines that the borrower is not eligible for a modification;

“(II) notifies the borrower of the determination under subclause (I); and

“(III) provides the borrower—

“(aa) a copy of any net present value calculation made by the servicer in relation to an affordable loan modification, including any information providing a basis for such net present value calculation;

“(bb) a copy of any note, deed of trust, or other document necessary to establish the right of the servicer to foreclose on the mortgage, including proof of assignment of the mortgage to the servicer and the right of the servicer to enforce the relevant note under the law of the State in which the real property securing the mortgage is located;

“(cc) a copy of any language in the pooling or servicing agreement with respect to the mortgage that the servicer relies upon in asserting that it is prohibited or limited in providing a modification of the mortgage note;

“(dd) a copy of all correspondence between the servicer and the borrowers and investors in which the servicer attempts to obtain permission to make a modification; and

“(ee) the alternatives to foreclosure available to the borrower, including deed in lieu of foreclosures and short sales; or

“(ii) a borrower—

“(I) declines to be considered for a loan modification in writing or declines an affordable modification in writing; or

“(II) does not respond to the servicer’s outreach activities (as defined by the Bureau) to obtain underlying information to complete an application or fails to make a trial or permanent loan modification payment.

“(C) Bar to foreclosure—Failure to comply with the requirements of this paragraph shall be a bar to the foreclosure of a mortgage, deed of trust, or substantially similar instrument.

“(D) Fees

“(i) Waiver of late fees—If a borrower’s application for affordable loan modification assistance is accepted, the servicer shall waive any foreclosure fees and any late fees related to the delinquency in payment.

“(ii) No fee accrual while application is pending—A borrower shall not accrue additional late or foreclosure fees during the period beginning on the date that the borrower submits an affordable loan modification application and the date on which the servicer makes a determination on such application.

“(E) Notification—With respect to a foreclosure sale that is postponed by reason of this subsection, the servicer shall notify the borrower in writing of such postponement and, if a date for such foreclosure sale is rescheduled, shall notify the borrower in writing of the new foreclosure sale date.

“(F) Certification of determination of eligibility required for sale

“(i) Sale of property prohibited—If the servicer of a mortgage does not file a certification with the appropriate land records office in the jurisdiction where the property securing the mortgage is located, stating that the servicer has determined the eligibility of the mortgagor for an affordable loan modification in compliance with this subsection—

“(I) the mortgagee may not sell the property securing the mortgage; and

“(II) no person that purchases the property securing the mortgage may initiate an action to recover possession of the property.

“(ii) Violations—A sale of property in violation of this subparagraph shall be void.

“(G) Initial application defined—For purposes of this paragraph, the term “initial application” means a completed Uniform Borrower Assistance Form 710 of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, a Request for Modification and Affidavit of the Making Home Affordable Program, or other equivalent form that sets forth the borrower’s financial, income, and hardship information and Form 4506–T of the Internal Revenue Service.

“(6) Affordable loan modifications

“(A) Affordable loan modification defined—For purposes of this subsection, the term affordable loan modification means an agreement to reduce the amount of scheduled regular payments, determined by the borrower’s debt-to-income ratio or residual income, and subject to such terms and conditions as may be set by the Bureau, including any reduction of the principal amount of the mortgage note as described in paragraph (4), that is reflected in a permanent change to the terms of the mortgage note under such terms as the Bureau shall define.

“(B) Calculation of target affordable regular mortgage payment—For purposes of this paragraph, the target affordable regular mortgage payment shall be an amount determined by the borrower’s debt-to-income ratio or residual income, and subject to such terms and conditions as may be set by the Bureau, subject to such terms and conditions as may be set by the Bureau. Such terms shall be based on a fully amortizing principal and interest payment over the remainder of the term of the mortgage, as modified by any reduction in principal.

“(C) Eligibility—A mortgagor shall be eligible to participate in an affordable loan modification if—

“(i) such person is a borrower under a federally related loan secured by the principal residence of the borrower or a person eligible to assume such a loan as a successor homeowner protected from an acceleration of a mortgage loan under the Garn-St Germain Depository Institutions Act of 1982, who is unable to make payments on a federally related mortgage loan under such criteria as the Director of the Bureau shall define, in consultation with the Secretary of Housing and Urban Development and the Secretary of the Treasury;

“(ii) such residence is occupied by the mortgagor; and

“(iii) the loan modification has a positive net present value (as defined under subparagraph (D)(ii)(IV)(bb)).

“(D) Earned principal forgiveness

“(i) In general—If, after reducing mortgage note principal under earned principal forgiveness provided in clause (ii), a target affordable regular mortgage payment has not been achieved, the servicer of the mortgage shall comply with the affordable loan modification plan waterfall steps as set out by the Bureau of interest rate reduction, term extension, and principal forbearance, as necessary to achieve a target affordable regular mortgage payment.

“(ii) Earned principal forgiveness

“(I) Principal reduction—The Bureau shall determine standards by which a mortgagor who has received an affordable loan modification shall remain in good standing in order to participate in a reduction in mortgage note principal under this paragraph.

“(II) Principal reduction required—Except as provided under subclause (III), a servicer shall offer a borrower an affordable loan modification having the maximum amount of principal reduction that results in a positive net present value calculation. For purposes of calculating net present value, a servicer may use their own formula, if it has been approved by the Bureau, or may use a default formula determined by the Bureau.

“(III) Exceptions

“(aa) Greater principal reduction—A servicer may offer a greater principal reduction, if such a reduction is consistent with the terms of any contract with respect to the mortgage.

“(bb) Loan-to-value ratio—A servicer is not required to offer a principal reduction that would result in a loan-to-value ratio of less than 100 percent.

“(IV) Rules of construction

“(aa) Maximum amount of principal reduction—A principal reduction amount may be considered the maximum amount if it is within $1,000 of the actual maximum amount.

“(bb) Positive net present value calculation—A net present value calculation shall be deemed to be “positive” for the mortgage investors if the net present value result for an affordable loan modification scenario is greater than the net present value result if no affordable loan modification is made. Net present value shall be calculated as the benefit of all investors in a securitization rather than the benefit of any particular class of investors.

“(V) Principal forgiveness

“(aa) Treatment of principal reduction amount—Any amount of principal reduction under subclause (II) shall be treated as noninterest-bearing principal forbearance until the dates described under item (bb). The principal reduction described in this clause shall be deemed to be separate from and exclusive of any other forbearance that may be offered in conjunction with a modification under an affordable loan modification program.

“(bb) Reduction of principal—The servicer of a mortgage modified under an affordable loan modification plan shall reduce the unpaid balance of the principal of the mortgage by an amount equal to 1⁄3 of the total amount of the principal reduction under subclause (II) on each of the following dates:

“(AA) The date that is 1 year after the date on which the affordable loan modification begins.

“(BB) The date that is 2 years after the date on which the affordable loan medication begins.

“(CC) The date that is 3 years after the date on which the affordable loan modification begins.

“(VI) Certain modifications—With respect to a borrower that is not underwater and does not qualify for principle reduction, the servicer shall offer such borrower an affordable loan modification to reach the target affordable regular mortgage payment amount, if the borrower qualifies.

“(E) Treatment of junior liens—With respect to a borrower, if a primary mortgage loan is modified pursuant to this paragraph, the servicer of any junior mortgage loan shall offer to modify or extinguish the second lien according to requirements established by the Bureau.

“(F) Rule of construction—Nothing in this subsection shall be construed as prohibiting a servicer from providing a loan modification that does not produce a positive net present value (as defined under subparagraph (D)(ii)(IV)(bb)).

“(7) Bar to foreclosure—In any judicial or nonjudicial foreclosure proceeding, it shall be a bar to foreclosure that the servicer of the federally related mortgage loan on the property to be foreclosed violated any provision of this subsection.

“(o) Mortgage Servicer Ombudsman

“(1) In general—The Director of the Bureau shall appoint a Mortgage Servicer Ombudsman (the “Ombudsman”) within the Bureau.

“(2) Duties—The Ombudsman shall provide assistance to servicers and borrowers in complying with Federal law with respect to the servicing of mortgage loans and offer resolution to borrowers who are facing noncompliance.

“(3) Focus on low-Income borrowers—In carrying out this subsection, the Ombudsman shall focus on providing assistance to low-income borrowers.

“(4) Consultation—The Ombudsman shall consult with—

“(A) attorneys general of States in carrying out this section; and

“(B) other offices of the Bureau that engage in dispute resolution.

“(5) Nonduplication—The Ombudsman may not carry out any activities that would be duplicative with activities of other Bureau offices.

“(p) Penalties for robo-Signing—Any servicer who records or files with a land records office or a court more than one document with material deficiencies with respect to a mortgage loan shall be subject to a fine of not more than $7,500 for each such loan.”