[Pages S2705-S2706]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

  SA 4492. Mr. REID (for Mrs. Clinton) submitted an amendment intended 
to be proposed by Mr. Reid to the bill H.R. 3221, moving the United 
States toward greater energy independence and security, developing 
innovative new technologies, reducing carbon emissions, creating green 
jobs, protecting consumers, increasing clean renewable energy 
production, and modernizing our energy infrastructure, and to amend the 
Internal Revenue Code of 1986 to provide tax incentives for the 
production of renewable energy and energy conservation; which was 
ordered to lie on the table; as follows:

       At the end, add the following:

         TITLE VIII--MORTGAGE ENHANCEMENT AND MODIFICATION ACT

     SEC. 801. SHORT TITLE.

       This title may be cited as the ``Mortgage Enhancement and 
     Modification Act of 2008''.

     SEC. 802. SAFE HARBOR FOR QUALIFIED LOAN MODIFICATIONS OR 
                   WORKOUT PLANS FOR CERTAIN RESIDENTIAL MORTGAGE 
                   LOANS.

       (a) Standard for Loan Modifications or Workout Plans.--
     Absent specific contractual provisions to the contrary--
       (1) the duty to maximize or not negatively affect, the 
     recovery of total proceeds from pooled residential mortgage 
     loans is owed by a servicer of such pooled loans to the 
     securitization vehicle for the benefit of all investors and 
     holders of beneficial interests in the pooled loans, in the 
     aggregate, and not to any individual party or group of 
     parties;
       (2) a servicer of pooled residential mortgage loans shall 
     be deemed to be acting on behalf of the securitization 
     vehicle in the best interest of all investors and holders of 
     beneficial interests in the pooled loans, in the aggregate 
     if--
       (A) for a loan that is in payment default under the loan 
     agreement or for which payment default is imminent or 
     reasonably foreseeable, the loan servicer makes reasonable 
     and documented efforts, which shall be made available to the 
     investors and holders of beneficial interests in the pooled 
     loans upon request, to implement a modification or workout 
     plan; or
       (B) the efforts under subparagraph (A) are unsuccessful or 
     such plan would be infeasible, engages in other loss 
     mitigation, including accepting a short payment or partial 
     discharge of principal, or agreeing to a short sale of the 
     property, to the extent that the servicer reasonably believes 
     the modification or workout plan or other mitigation actions 
     will maximize the net present value to be realized on the 
     loans over that which would be realized through foreclosure 
     under the present terms of the contract; and
       (3) a servicer shall be deemed to be acting on behalf of 
     the securitization vehicle in the best interest of all 
     investors and holders of beneficial interests in the pooled 
     loans, in the aggregate, if the servicer makes efforts--
       (A) to proactively contact borrowers that are reasonably 
     considered to be approaching a calendar date in which a 
     predetermined or contractually established rate of interest 
     on the principal of the loan shall--
       (i) increase or fluctuate in accordance with a designated 
     market indicator or indicators; or
       (ii) increase or fluctuate within a predetermined range; 
     and
       (B) to determine--
       (i) the ability of the borrower to make payments following 
     a reset of interest rates using common and appropriate metric 
     standards such as debt to income ratios;
       (ii) whether the borrower is in danger of default or 
     disclosure; and
       (iii) whether a loan modification or other mitigation 
     effort is appropriate.
       (b) Safe Harbor.--Absent specific contractual provisions to 
     the contrary, a servicer of a residential mortgage loan that 
     acts in a

[[Page S2706]]

     manner consistent with the provisions set forth in subsection 
     (a), shall not be liable for entering into a qualified loan 
     modification, or other loss mitigation effort described in 
     subsection (a) to--
       (1) any person, based on that person's ownership of a 
     residential mortgage loan or any interest in a pool of 
     residential mortgage loans or in securities that distribute 
     payments out of the principal, interest, and other payments 
     in loans on the pool;
       (2) any person who is obligated to make payments determined 
     in reference to any loan or any interest referred to in 
     paragraph (1);
       (3) any person that insures any loan or any interest 
     referred to in paragraph (1) under any law or regulation of 
     the United States or any law or regulation of any State or 
     political subdivision of any State; or
       (4) any other person or institution that may have a 
     financial or commercial relationship and association with the 
     persons associated in paragraphs (1) through (3).
       (c) Rule of Construction.--No provision of this section 
     shall be construed as limiting the ability of a servicer to 
     enter into loan modifications or workout plans other than 
     qualified loan modification or workout plans.
       (d) Definitions.--As used in this section, the following 
     definitions shall apply:
       (1) Qualified loan modification or workout plan.--The term 
     ``qualified loan modification or workout plan'' means a 
     modification or plan that--
       (A) is scheduled to remain in place until the borrower 
     sells or refinances the property, or for at least 5 years 
     from the date of adoption of the plan, whichever is sooner;
       (B) does not provide for a repayment schedule that results 
     in negative amortization at any time;
       (C) does not require the borrower to pay additional points 
     and fees;
       (D) materially improves the ability of the borrower to--
       (i) prevent foreclosure; and
       (ii) resume a reasonable repayment schedule based on, but 
     not limited to, debt to income ratio; and
       (E) would reasonably reduce the likelihood of default of 
     foreclosure during the life of the modification or plan;
       (F) may waive any prepayment penalties that reasonably 
     inhibited a loan holder from fulfilling his ability to pay 
     down the principal or maintain regular payments as defined by 
     the terms of the loan; and
       (G) includes full and accurate disclosure to the borrower 
     of the terms of the modification or workout plan, provided 
     that such disclosures are executed in easy to understand 
     terms that demonstrate how the borrower will benefit from the 
     new terms in such modification or workout plan as compared 
     with the terms and conditions of the previous loan of the 
     borrower.
       (2) Residential mortgage loan.--The term ``residential 
     mortgage loan'' means a loan that is secured by a lien on an 
     owner-occupied residential dwelling.
       (3) Securitization vehicle.--The term ``securitization 
     vehicle'' means a trust, corporation, partnership, limited 
     liability entity, special purpose entity, or other structure 
     that--
       (A) is the issuer, or is created by the issuer, of mortgage 
     pass-through certificates, participation certificates, 
     mortgage-backed securities, or other similar securities 
     backed by a pool of assets that includes residential mortgage 
     loans; and
       (B) holds such loans.
       (e) Limitations on Safe Harbor.--Except for the provisions 
     of section 2 that limit liability for efforts to pursue 
     qualified loan modifications or workout plans, the provisions 
     of this section shall not be construed to affect or limit any 
     other liability, duty, or other fiduciary obligation of the 
     servicer to the investors and holders of beneficial interests 
     in the pooled loans to a securitization vehicle, as 
     prescribed by any other specific contractual provision agreed 
     upon, or any other liability, duty, or other fiduciary 
     obligation set forth under any--
       (1) law or regulation of the United States;
       (2) law or regulation of any State or political subdivision 
     of any State; or
       (3) established and approved standards for best practices 
     of any industry or trade group.
       (f) Effective Period.--This section shall apply only with 
     respect to qualified loan modification or workout plans 
     initiated prior to January 1, 2012.
                                 ______