Text: H.R.1295 — 111th Congress (2009-2010)All Bill Information (Except Text)

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Introduced in House (03/04/2009)


111th CONGRESS
1st Session
H. R. 1295

To mitigate mortgage foreclosures, facilitate and include fairness in housing recovery, and combat mortgage fraud, and for other purposes.


IN THE HOUSE OF REPRESENTATIVES
March 4, 2009

Mrs. Biggert (for herself, Mr. Bachus, Mr. Neugebauer, Mrs. Capito, Ms. Ginny Brown-Waite of Florida, Mr. Rogers of Michigan, Mr. Jones, Mr. Shimkus, Mr. Rooney, Mr. Sessions, Mr. Turner, Mr. Smith of Texas, Mr. Paulsen, Mrs. Bono Mack, Mr. Lance, Mr. Bilbray, Mr. Reichert, Mr. Castle, Mr. McCaul, Mr. Johnson of Illinois, Mrs. Miller of Michigan, and Mrs. Schmidt) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned


A BILL

To mitigate mortgage foreclosures, facilitate and include fairness in housing recovery, and combat mortgage fraud, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Short title and table of contents.

(a) Short title.—This Act may be cited as the “Fairness in Housing Recovery Act of 2009”.

(b) Table of contents.—The table of contents for this Act is as follows:


Sec. 1. Short title and table of contents.

Sec. 2. Servicer safe harbor for mortgage loan modifications.

Sec. 3. Replacement of HOPE for Homeowners Program with program for insurance of homeownership retention mortgages.

Sec. 4. Expanding and preserving homeownership through counseling.

Sec. 5. Requirements for FHA-approved mortgagees.

Sec. 6. Commission on the Foreclosure and Mortgage Lending Crisis.

Sec. 7. Authorization of appropriations for combating mortgage fraud.

Sec. 8. Enhancement of liquidity and stability of insured depository institutions to ensure availability of credit and reduction of foreclosures.

Sec. 9. Prohibition on the receipt of common stock and the exercise of stock voting power.

Sec. 10. Treatment of gain on disposition of subsidized residences.

Sec. 11. Refundable tax credit for residences purchased during 2009 or 2010.

Sec. 12. Conditions on mortgage relief.

SEC. 2. Servicer safe harbor for mortgage loan modifications.

(a) Safe Harbor.—

(1) LOAN MODIFICATIONS AND WORKOUT PLANS.—Notwithstanding any other provision of law, and notwithstanding any investment contract between a servicer and a securitization vehicle or investor, a servicer that acts consistent with the duty set forth in section 129A(a) of Truth in Lending Act (15 U.S.C. 1639a) shall not be liable for entering into a loan modification, workout, or other loss mitigation plan, including, but not limited to, disposition, including any modification or refinancing undertaken pursuant to standard loan modification, sale, or disposition guidelines issued by the Secretary of the Treasury or his designee under the Emergency Economic Stabilization Act of 2008, with respect to any such mortgage that meets all of the criteria set forth in paragraph (2)(B) to—

(A) 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;

(B) any person who is obligated pursuant to a derivatives instrument to make payments determined in reference to any loan or any interest referred to in subparagraph (A); or

(C) any person that insures any loan or any interest referred to in subparagraph (A) under any law or regulation of the United States or any law or regulation of any State or political subdivision of any State.

(2) ABILITY TO MODIFY MORTGAGES.—

(A) ABILITY.—Notwithstanding any other provision of law, and notwithstanding any investment contract between a servicer and a securitization vehicle or investor, a servicer—

(i) shall not be limited in the ability to modify mortgages, the number of mortgages that can be modified, the frequency of loan modifications, or the range of permissible modifications; and

(ii) shall not be obligated to repurchase loans from or otherwise make payments to the securitization vehicle on account of a modification, workout, or other loss mitigation plan for a residential mortgage or a class of residential mortgages that constitute a part or all of the mortgages in the securitization vehicle,

if any mortgage so modified meets all of the criteria set forth in subparagraph (B).

(B) CRITERIA.—The criteria under this subparagraph with respect to a mortgage are as follows:

(i) Default on the payment of such mortgage has occurred or is reasonably foreseeable.

(ii) The property securing such mortgage is occupied by the mortgagor of such mortgage.

(iii) The servicer reasonably and in good faith believes that the anticipated recovery on the principal outstanding obligation of the mortgage under the particular modification or workout plan or other loss mitigation action will exceed, on a net present value basis, the anticipated recovery on the principal outstanding obligation of the mortgage to be realized through foreclosure.

(3) APPLICABILITY.—This subsection shall apply only with respect to modifications, workouts, and other loss mitigation plans initiated before January 1, 2012.

(b) Reporting.—Each servicer that engages in loan modifications or workout plans subject to the safe harbor in subsection (a) shall report to the Secretary on a regular basis regarding the extent, scope and results of the servicer’s modification activities. The Secretary shall prescribe regulations specifying the form, content, and timing of such reports.

(c) Legal costs.—If an unsuccessful action is brought against a servicer by any person described in subparagraph (A), (B), or (C) of subsection (a)(1), such person shall bear any actual legal costs of the servicer, including reasonable attorney fees and expert witness fees, incurred in good faith in such action, as determined by the court.

(d) Definitions.—For purposes of this section, the following definitions shall apply:

(1) SECRETARY.—The term “Secretary” means the Secretary of the Treasury.

(2) 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 mortgages.

SEC. 3. Replacement of HOPE for Homeowners Program with program for insurance of homeownership retention mortgages.

(a) Replacement of program.—Title II of the National Housing Act (12 U.S.C. 1707 et seq.) is amended—

(1) in section 257 (12 U.S.C. 1715z–23), as added by section 1402(a) of Public Law 110–289—

(A) by striking subsections (a) through (k); and

(B) by striking subsections (n) through (v);

(2) by redesignating section 257 (12 U.S.C. 1715z–24), as added by section 2124 of Public Law 110–289, as section 259; and

(3) by inserting before such section 259 (as so redesignated) the following new section:

“SEC. 258. Insurance of homeownership retention mortgages.

“(a) Authority.—The Secretary shall, subject only to the absence of qualified requests for insurance under this section and to the limitations under sections 257(m) and 531(a), make commitments to insure and insure any mortgage covering a 1- to 4-family residence that is made for the purpose of paying or prepaying outstanding obligations under an existing mortgage or mortgages on the residence if the mortgage being insured under this section meets the requirements of this section, as established by the Secretary. The Secretary shall establish such mortgage insurance products, and requirements and standards, in accordance with this section as the Secretary considers appropriate to carry out this section and shall prescribe such regulations and provide such guidance as may be necessary or appropriate to implement such products, requirements, and standards.

“(b) Requirements of insured mortgage.—To be eligible for insurance under this section, a mortgage to be insured under this section shall comply with all of the following requirements:

“(1) PRIMARY RESIDENCE.—The mortgagor under the mortgage to be insured shall provide documentation satisfactory in the determination of the Secretary to prove that the residence covered by the mortgage to be insured under this section is occupied by the mortgagor as the primary residence of the mortgagor, and that such residence is the only residence in which the mortgagor has any present ownership interest.

“(2) TROUBLED HOMEOWNER.—The mortgagor under the mortgage to be insured shall be the mortgagor under the existing mortgage to be refinanced by the insured mortgage and shall—

“(A) be in default on the mortgagor’s obligations under the existing mortgage;

“(B) be in danger of defaulting, as determined in accordance with standards established by the Secretary, on the mortgagor’s obligations under the existing mortgage; or

“(C) have a remaining principal obligation amount under such existing mortgage that exceeds, at the time of the commitment for mortgage insurance under this section, the appraised value of the property that is subject to such existing mortgage.

“(3) PROHIBITION ON REFINANCING LIAR LOANS.—The Secretary may not insure a mortgage under this section if the mortgagor under such mortgage has knowingly, or willfully and with actual knowledge, furnished any material information regarding the income or financial worth of the mortgagor that is known to be false for the purpose of obtaining the existing mortgage that is to be refinanced by the mortgage to be insured under this section.

“(4) EXCLUSION OF ZERO DOWN PAYMENT LOANS.—In connection with the origination of the senior existing mortgage to be refinanced with the mortgage insured under this section, the mortgagor shall have made a down payment, in cash or its equivalent, on account of the property purchased under such senior existing mortgage.

“(5) EXCLUSION OF NO-DOC LOANS.—The existing senior mortgage to be refinanced with the mortgage insured under this section shall have been originated only pursuant to the mortgagor providing documentation sufficient to verify the amount and source of the mortgagor’s income.

“(6) PROHIBITION ON REFINANCING ZERO-DOWN LOANS AND LOANS WITH EQUITY REMOVED.—The Secretary may not insure a mortgage under this section if—

“(A) under the existing mortgage to be refinanced, the mortgagor did not make any payment on account of the property (or any payment exceeding such nominal amount as the Secretary may establish), in cash or its equivalent, in connection with acquisition of the property; or

“(B) during the term of the existing mortgage to be refinanced, the mortgagor withdrew all, or substantially all (in accordance with such standards and guidelines as the Secretary shall establish) of any equity of the mortgagor in the property subject to such existing mortgage.

“(7) TERMS.—The mortgage to be insured under this section shall have such terms and conditions as the Secretary shall provide, except that such mortgage shall—

“(A) have a term to maturity not exceeding 40 years; and

“(B) bear interest at an annual rate that is fixed for the entire term of the mortgage.

“(8) REQUIRED WAIVER OF PREPAYMENT PENALTIES AND FEES.—All penalties for prepayment or refinancing of the existing mortgage, and all fees and penalties related to default or delinquency on the existing mortgage, shall be waived or forgiven.

“(9) SHARED APPRECIATION.—The Secretary shall provide that, with respect to each mortgage insured under this section, upon any sale or disposition of the property subject to such mortgage occurring during the 5-year period beginning on the date of the insurance of the mortgage, to the extent of any principal write-down or interest rate subsidy provided in connection with the mortgage, the Secretary and the mortgagee shall be entitled to a percentage of any appreciation in value of such property that has occurred since the date that such mortgage was insured under this section, which percentage shall decrease over time, and the mortgagor shall be entitled to the remainder of any such appreciation.

“(10) MAXIMUM LOAN AMOUNT.—The principal obligation amount of the mortgage to be insured under this section shall not exceed the applicable dollar amount limitation in effect under section 305(a)(2) of the Federal Home Loan Mortgage Corporation (12 U.S.C. 1452(a)(2)) for a property of the applicable size for the area in which the property is located .

“(11) TERM; INTEREST RATE.—The refinanced eligible mortgage to be insured shall—

“(A) bear interest at a single rate that is fixed for the entire term of the mortgage; and

“(B) have a maturity of not less than 30 years from the date of the beginning of amortization of such refinanced eligible mortgage.

“(c) Exit fee.—The Secretary may establish a fee, charge, or other mechanism for recovering, upon sale or other disposition of the property that is subject to the mortgage insured under this section or upon the subsequent refinancing of the mortgage, a portion of the equity or appreciation in the property.

“(d) GNMA pricing.—In order to facilitate favorable pricing for loans insured under this section, the Board of Governors of the Federal Reserve System, the Secretary of the Treasury, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation are authorized to purchase mortgage-backed securities guaranteed by the Government National Mortgage Association that are backed by loans originated under this section or whole loans originated and purchased under this section. The Government National Mortgage Association is authorized to hold, sell, and securitize whole loans originated under this section.

“(e) Definitions.—For purposes of this section, the following definitions shall apply:

“(1) EXISTING MORTGAGE.—The term ‘existing mortgage’ means, with respect to a mortgage insured under this section, a mortgage that is to be extinguished, and paid or prepaid, from the proceeds of the mortgage insured under this section.

“(2) SENIOR EXISTING MORTGAGE.—The term ‘senior existing mortgage’ means, with respect to a mortgage insured under this section, the existing mortgage that has superior priority.

“(f) Sunset.—The Secretary may not enter into any new commitment to insure any refinanced eligible mortgage, or newly insure any refinanced eligible mortgage pursuant to this section after the expiration of the 3-year period beginning upon the date of the enactment of this section.”.

(b) Use of aggregate insurance authority and funds under HOPE for Homeowners Program.—Section 257 of the National Housing Act (12 U.S.C. 1715z–24), as added by section 1402(a) of Public Law 110–289), is amended—

(1) in subsection (l)(1), by striking “this section” and inserting “section 258”;

(2) in subsection (m), by striking “this section” and inserting “section 258”;

(3) in subsection (w)—

(A) in paragraphs (1) and (3), by striking “HOPE for Homeowners Program” each place such term appears and inserting “mortgage insurance program under section 258”; and

(B) in paragraph (4) by striking “HOPE for Homeowners Program in accordance with subsections (i) and (k)” and inserting “mortgage insurance program under section 258”;

(4) by redesignating subsections (l), (m), and (w) as subsections (a), (b), and (c), respectively; and

(5) by striking the section heading and inserting the following: “HOPE Fund and HOPE bonds.

(c) Reducing TARP funds To offset costs of program.—Paragraph (3) of section 115(a) of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5225) is amended by inserting “, as such amount is reduced by $1,000,000,000,” after “$700,000,000,000”.

SEC. 4. Expanding and preserving homeownership through counseling.

(a) Establishment of Office of Housing Counseling.—Section 4 of the Department of Housing and Urban Development Act (42 U.S.C. 3533) is amended by adding at the end the following new subsection:

“(g) Office of Housing Counseling.—

“(1) ESTABLISHMENT.—There is established, in the Office of the Secretary, the Office of Housing Counseling.

“(2) DIRECTOR.—There is established the position of Director of Housing Counseling. The Director shall be the head of the Office of Housing Counseling and shall be appointed by the Secretary. Such position shall be a career-reserved position in the Senior Executive Service.

“(3) FUNCTIONS.—

“(A) IN GENERAL.—The Director shall have ultimate responsibility within the Department, except for the Secretary, for all activities and matters relating to homeownership counseling and rental housing counseling, including—

“(i) research, grant administration, public outreach, and policy development relating to such counseling; and

“(ii) establishment, coordination, and administration of all regulations, requirements, standards, and performance measures under programs and laws administered by the Department that relate to housing counseling, homeownership counseling (including maintenance of homes), mortgage-related counseling (including home equity conversion mortgages and credit protection options to avoid foreclosure), and rental housing counseling, including the requirements, standards, and performance measures relating to housing counseling.

“(B) SPECIFIC FUNCTIONS.—The Director shall carry out the functions assigned to the Director and the Office under this section and any other provisions of law. Such functions shall include establishing rules necessary for—

“(i) the counseling procedures under section 106(g)(1) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(h)(1));

“(ii) carrying out all other functions of the Secretary under section 106(g) of the Housing and Urban Development Act of 1968, including the establishment, operation, and publication of the availability of the toll-free telephone number under paragraph (2) of such section;

“(iii) carrying out section 5 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2604) for home buying information booklets prepared pursuant to such section;

“(iv) carrying out the certification program under section 106(e) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e));

“(v) carrying out the assistance program under section 106(a)(4) of the Housing and Urban Development Act of 1968, including criteria for selection of applications to receive assistance;

“(vi) carrying out any functions regarding abusive, deceptive, or unscrupulous lending practices relating to residential mortgage loans that the Secretary considers appropriate, which shall include conducting the study under section 4(e) of the Fairness in Housing Recovery Act of 2009;

“(vii) providing for operation of the advisory committee established under paragraph (4) of this subsection;

“(viii) collaborating with community-based organizations with expertise in the field of housing counseling; and

“(ix) providing for the building of capacity to provide housing counseling services in areas that lack sufficient services.

“(4) ADVISORY COMMITTEE.—

“(A) IN GENERAL.—The Secretary shall appoint an advisory committee to provide advice regarding the carrying out of the functions of the Director.

“(B) MEMBERS.—Such advisory committee shall consist of not more than 12 individuals, and the membership of the committee shall equally represent all aspects of the mortgage and real estate industry, including consumers.

“(C) TERMS.—Except as provided in subparagraph (D), each member of the advisory committee shall be appointed for a term of 3 years. Members may be reappointed at the discretion of the Secretary.

“(D) TERMS OF INITIAL APPOINTEES.—As designated by the Secretary at the time of appointment, of the members first appointed to the advisory committee, 4 shall be appointed for a term of 1 year and 4 shall be appointed for a term of 2 years.

“(E) PROHIBITION OF PAY; TRAVEL EXPENSES.—Members of the advisory committee shall serve without pay, but shall receive travel expenses, including per diem in lieu of subsistence, in accordance with applicable provisions under subchapter I of chapter 57 of title 5, United States Code.

“(F) ADVISORY ROLE ONLY.—The advisory committee shall have no role in reviewing or awarding housing counseling grants.

“(5) SCOPE OF HOMEOWNERSHIP COUNSELING.—In carrying out the responsibilities of the Director, the Director shall ensure that homeownership counseling provided by, in connection with, or pursuant to any function, activity, or program of the Department addresses the entire process of homeownership, including the decision to purchase a home, the selection and purchase of a home, issues arising during or affecting the period of ownership of a home (including refinancing, default and foreclosure, and other financial decisions), and the sale or other disposition of a home.”.

(b) Counseling procedures.—

(1) IN GENERAL.—Section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x) is amended by adding at the end the following new subsection:

“(g) Procedures and activities.—

“(1) COUNSELING PROCEDURES.—

“(A) IN GENERAL.—The Secretary shall establish, coordinate, and monitor the administration by the Department of Housing and Urban Development of the counseling procedures for homeownership counseling and rental housing counseling provided in connection with any program of the Department, including all requirements, standards, and performance measures that relate to homeownership and rental housing counseling.

“(B) HOMEOWNERSHIP COUNSELING.—For purposes of this subsection and as used in the provisions referred to in this subparagraph, the term ‘homeownership counseling’ means counseling related to homeownership and residential mortgage loans. Such term includes counseling related to homeownership and residential mortgage loans that is provided pursuant to—

“(i) section 105(a)(20) of the Housing and Community Development Act of 1974 (42 U.S.C. 5305(a)(20));

“(ii) in the United States Housing Act of 1937—

“(I) section 9(e) (42 U.S.C. 1437g(e));

“(II) section 8(y)(1)(D) (42 U.S.C. 1437f(y)(1)(D));

“(III) section 18(a)(4)(D) (42 U.S.C. 1437p(a)(4)(D));

“(IV) section 23(c)(4) (42 U.S.C. 1437u(c)(4));

“(V) section 32(e)(4) (42 U.S.C. 1437z–4(e)(4));

“(VI) section 33(d)(2)(B) (42 U.S.C. 1437z–5(d)(2)(B));

“(VII) sections 302(b)(6) and 303(b)(7) (42 U.S.C. 1437aaa–1(b)(6), 1437aaa–2(b)(7)); and

“(VIII) section 304(c)(4) (42 U.S.C. 1437aaa–3(c)(4));

“(iii) section 302(a)(4) of the American Homeownership and Economic Opportunity Act of 2000 (42 U.S.C. 1437f note);

“(iv) sections 233(b)(2) and 258(b) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12773(b)(2), 12808(b));

“(v) this section and section 101(e) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x, 1701w(e));

“(vi) section 220(d)(2)(G) of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4110(d)(2)(G));

“(vii) sections 422(b)(6), 423(b)(7), 424(c)(4), 442(b)(6), and 443(b)(6) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12872(b)(6), 12873(b)(7), 12874(c)(4), 12892(b)(6), and 12893(b)(6));

“(viii) section 491(b)(1)(F)(iii) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11408(b)(1)(F)(iii));

“(ix) sections 202(3) and 810(b)(2)(A) of the Native American Housing and Self-Determination Act of 1996 (25 U.S.C. 4132(3), 4229(b)(2)(A));

“(x) in the National Housing Act—

“(I) in section 203 (12 U.S.C. 1709), the penultimate undesignated paragraph of paragraph (2) of subsection (b), subsection (c)(2)(A), and subsection (r)(4);

“(II) subsections (a) and (c)(3) of section 237 (12 U.S.C. 1715z–2); and

“(III) subsections (d)(2)(B) and (m)(1) of section 255 (12 U.S.C. 1715z–20);

“(xi) section 502(h)(4)(B) of the Housing Act of 1949 (42 U.S.C. 1472(h)(4)(B)); and

“(xii) section 508 of the Housing and Urban Development Act of 1970 (12 U.S.C. 1701z–7).

“(C) RENTAL HOUSING COUNSELING.—For purposes of this subsection, the term ‘rental housing counseling’ means counseling related to rental of residential property, which may include counseling regarding future homeownership opportunities and providing referrals for renters and prospective renters to entities providing counseling and shall include counseling related to such topics that is provided pursuant to—

“(i) section 105(a)(20) of the Housing and Community Development Act of 1974 (42 U.S.C. 5305(a)(20));

“(ii) in the United States Housing Act of 1937—

“(I) section 9(e) (42 U.S.C. 1437g(e));

“(II) section 18(a)(4)(D) (42 U.S.C. 1437p(a)(4)(D));

“(III) section 23(c)(4) (42 U.S.C. 1437u(c)(4));

“(IV) section 32(e)(4) (42 U.S.C. 1437z–4(e)(4));

“(V) section 33(d)(2)(B) (42 U.S.C. 1437z–5(d)(2)(B)); and

“(VI) section 302(b)(6) (42 U.S.C. 1437aaa–1(b)(6));

“(iii) section 233(b)(2) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12773(b)(2));

“(iv) section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x);

“(v) section 422(b)(6) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12872(b)(6));

“(vi) section 491(b)(1)(F)(iii) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11408(b)(1)(F)(iii));

“(vii) sections 202(3) and 810(b)(2)(A) of the Native American Housing and Self-Determination Act of 1996 (25 U.S.C. 4132(3), 4229(b)(2)(A)); and

“(viii) the rental assistance program under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f).

“(2) STANDARDS FOR MATERIALS.—The Secretary, in conjunction with the advisory committee established under section 4(g)(4) of the Department of Housing and Urban Development Act (42 U.S.C. 3533(g)(4), shall establish standards for materials and forms to be used, as appropriate, by organizations providing homeownership counseling services, including any recipients of assistance pursuant to subsection (a)(4).

“(3) MORTGAGE SOFTWARE SYSTEMS.—

“(A) CERTIFICATION.—The Secretary shall provide for the certification of various computer software programs for consumers to use in evaluating different residential mortgage loan proposals. The Secretary shall require, for such certification, that the mortgage software systems take into account—

“(i) the consumer’s financial situation and the cost of maintaining a home, including insurance, taxes, and utilities;

“(ii) the amount of time the consumer expects to remain in the home or expected time to maturity of the loan; and

“(iii) such other factors as the Secretary considers appropriate to assist the consumer in evaluating whether to pay points, to lock in an interest rate, to select an adjustable or fixed rate loan, to select a conventional or government-insured or guaranteed loan and to make other choices during the loan application process.

If the Secretary determines that available existing software is inadequate to assist consumers during the residential mortgage loan application process, the Secretary shall arrange for the development by private sector software companies of new mortgage software systems that meet the Secretary’s specifications.

“(B) USE AND INITIAL AVAILABILITY.—Such certified computer software programs shall be used to supplement, not replace, housing counseling. The Secretary shall provide that such programs are initially used only in connection with the assistance of housing counselors certified pursuant to subsection (e).

“(C) AVAILABILITY.—After a period of initial availability under subparagraph (B) as the Secretary considers appropriate, the Secretary shall take reasonable steps to make mortgage software systems certified pursuant to this paragraph widely available through the Internet and at public locations, including public libraries, senior-citizen centers, public housing sites, offices of public housing agencies that administer rental housing assistance vouchers, and housing counseling centers.

“(4) NATIONAL PUBLIC SERVICE MULTIMEDIA CAMPAIGNS TO PROMOTE HOUSING COUNSELING.—

“(A) IN GENERAL.—The Director of Housing Counseling shall develop, implement, and conduct national public service multimedia campaigns designed to make persons facing mortgage foreclosure, persons considering a subprime mortgage loan to purchase a home, elderly persons, persons who face language barriers, low-income persons, and other potentially vulnerable consumers aware that it is advisable, before seeking or maintaining a residential mortgage loan, to obtain homeownership counseling from an unbiased and reliable sources and that such homeownership counseling is available, including through programs sponsored by the Secretary of Housing and Urban Development.

“(B) CONTACT INFORMATION.—Each segment of the multimedia campaign under subparagraph (A) shall publicize the toll-free telephone number and web site of the Department of Housing and Urban Development through which persons seeking housing counseling can locate a housing counseling agency in their State that is certified by the Secretary of Housing and Urban Development and can provide advice on buying a home, renting, defaults, foreclosures, credit issues, and reverse mortgages.

“(C) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated to the Secretary, not to exceed $3,000,000 for fiscal years 2009, 2010, and 2011, for the development, implementation, and conducting of national public service multimedia campaigns under this paragraph.

“(5) EDUCATION PROGRAMS.—The Secretary shall provide advice and technical assistance to States, units of general local government, and nonprofit organizations regarding the establishment and operation of, including assistance with the development of content and materials for, educational programs to inform and educate consumers, particularly those most vulnerable with respect to residential mortgage loans (such as elderly persons, persons facing language barriers, low-income persons, and other potentially vulnerable consumers), regarding home mortgages, mortgage refinancing, home equity loans, and home repair loans.”.

(2) CONFORMING AMENDMENTS TO GRANT PROGRAM FOR HOMEOWNERSHIP COUNSELING ORGANIZATIONS.—Section 106(c)(5)(A)(ii) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(c)(5)(A)(ii)) is amended—

(A) in subclause (III), by striking “and” at the end;

(B) in subclause (IV) by striking the period at the end and inserting “; and”; and

(C) by inserting after subclause (IV) the following new subclause:

“(V) notify the housing or mortgage applicant of the availability of mortgage software systems provided pursuant to subsection (g)(3).”.

(c) Grants for housing counseling assistance.—Section 106(a) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(a)(3)) is amended by adding at the end the following new paragraph:

“(4) Homeownership and rental counseling assistance.—

“(A) IN GENERAL.—The Secretary shall make financial assistance available under this paragraph to States, units of general local governments, and nonprofit organizations providing homeownership or rental counseling (as such terms are defined in subsection (g)(1)).

“(B) QUALIFIED ENTITIES.—The Secretary shall establish standards and guidelines for eligibility of organizations (including governmental and nonprofit organizations) to receive assistance under this paragraph.

“(C) DISTRIBUTION.—Assistance made available under this paragraph shall be distributed in a manner that encourages efficient and successful counseling programs.

“(D) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated $45,000,000 for each of fiscal years 2009 through 2012 for—

“(i) the operations of the Office of Housing Counseling of the Department of Housing and Urban Development;

“(ii) the responsibilities of the Secretary under paragraphs (2) through (5) of subsection (g); and

“(iii) assistance pursuant to this paragraph for entities providing homeownership and rental counseling.”.

(d) Requirements To use HUD-certified counselors under HUD programs.—Section 106(e) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)) is amended—

(1) by striking paragraph (1) and inserting the following new paragraph:

“(1) REQUIREMENT FOR ASSISTANCE.—An organization may not receive assistance for counseling activities under subsection (a)(1)(iii), (a)(2), (a)(4), (c), or (d) of this section, or under section 101(e), unless the organization, or the individuals through which the organization provides such counseling, has been certified by the Secretary under this subsection as competent to provide such counseling.”;

(2) in paragraph (2)—

(A) by inserting “and for certifying organizations” before the period at the end of the first sentence; and

(B) in the second sentence by striking “for certification” and inserting “, for certification of an organization, that each individual through which the organization provides counseling shall demonstrate, and, for certification of an individual,”;

(3) in paragraph (3), by inserting “organizations and” before “individuals”;

(4) by redesignating paragraph (3) as paragraph (5); and

(5) by inserting after paragraph (2) the following new paragraphs:

“(3) REQUIREMENT UNDER HUD PROGRAMS.—Any homeownership counseling or rental housing counseling (as such terms are defined in subsection (g)(1)) required under, or provided in connection with, any program administered by the Department of Housing and Urban Development shall be provided only by organizations or counselors certified by the Secretary under this subsection as competent to provide such counseling.

“(4) OUTREACH.—The Secretary shall take such actions as the Secretary considers appropriate to ensure that individuals and organizations providing homeownership or rental housing counseling are aware of the certification requirements and standards of this subsection and of the training and certification programs under subsection (f).”.

(e) Study of defaults and foreclosures.—The Secretary of Housing and Urban Development shall conduct an extensive study of the root causes of default and foreclosure of home loans, using as much empirical data as are available. The study shall also examine the role of escrow accounts in helping prime and nonprime borrowers to avoid defaults and foreclosures. Not later than 12 months after the date of the enactment of this Act, the Secretary shall submit to the Congress a preliminary report regarding the study. Not later than 24 months after such date of enactment, the Secretary shall submit a final report regarding the results of the study, which shall include any recommended legislation relating to the study, and recommendations for best practices and for a process to identify populations that need counseling the most.

(f) Definitions for counseling-related programs.—Section 106 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x), as amended by the preceding provisions of this section, is further amended by adding at the end the following new subsection:

“(h) Definitions.—For purposes of this section:

“(1) NONPROFIT ORGANIZATION.—The term ‘nonprofit organization’ has the meaning given such term in section 104(5) of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12704(5)), except that subparagraph (D) of such section shall not apply for purposes of this section.

“(2) STATE.—The term ‘State’ means each of the several States, the Commonwealth of Puerto Rico, the District of Columbia, the Commonwealth of the Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, the Trust Territories of the Pacific, or any other possession of the United States.

“(3) UNIT OF GENERAL LOCAL GOVERNMENT.—The term ‘unit of general local government’ means any city, county, parish, town, township, borough, village, or other general purpose political subdivision of a State.”.

(g) Updating and simplification of mortgage information booklet.—Section 5 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2604) is amended—

(1) in the section heading, by striking “special” and inserting “home buying”;

(2) by striking subsections (a) and (b) and inserting the following new subsections:

“(a) Preparation and distribution.—The Secretary shall prepare, at least once every 5 years, a booklet to help consumers applying for federally related mortgage loans to understand the nature and costs of real estate settlement services. The Secretary shall prepare the booklet in various languages and cultural styles, as the Secretary determines to be appropriate, so that the booklet is understandable and accessible to homebuyers of different ethnic and cultural backgrounds. The Secretary shall distribute such booklets to all lenders that make federally related mortgage loans. The Secretary shall also distribute to such lenders lists, organized by location, of homeownership counselors certified under section 106(e) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)) for use in complying with the requirement under subsection (c) of this section.

“(b) Contents.—Each booklet shall be in such form and detail as the Secretary shall prescribe and, in addition to such other information as the Secretary may provide, shall include in plain and understandable language the following information:

“(1) A description and explanation of the nature and purpose of the costs incident to a real estate settlement or a federally related mortgage loan. The description and explanation shall provide general information about the mortgage process as well as specific information concerning, at a minimum—

“(A) balloon payments;

“(B) prepayment penalties; and

“(C) the trade-off between closing costs and the interest rate over the life of the loan.

“(2) An explanation and sample of the uniform settlement statement required by section 4.

“(3) A list and explanation of lending practices, including those prohibited by the Truth in Lending Act or other applicable Federal law, and of other unfair practices and unreasonable or unnecessary charges to be avoided by the prospective buyer with respect to a real estate settlement.

“(4) A list and explanation of questions a consumer obtaining a federally related mortgage loan should ask regarding the loan, including whether the consumer will have the ability to repay the loan, whether the consumer sufficiently shopped for the loan, whether the loan terms include prepayment penalties or balloon payments, and whether the loan will benefit the borrower.

“(5) An explanation of the right of rescission as to certain transactions provided by sections 125 and 129 of the Truth in Lending Act.

“(6) A brief explanation of the nature of a variable rate mortgage and a reference to the booklet entitled ‘Consumer Handbook on Adjustable Rate Mortgages’, published by the Board of Governors of the Federal Reserve System pursuant to section 226.19(b)(1) of title 12, Code of Federal Regulations, or to any suitable substitute of such booklet that such Board of Governors may subsequently adopt pursuant to such section.

“(7) A brief explanation of the nature of a home equity line of credit and a reference to the pamphlet required to be provided under section 127A of the Truth in Lending Act.

“(8) Information about homeownership counseling services made available pursuant to section 106(a)(4) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(a)(4)), a recommendation that the consumer use such services, and notification that a list of certified providers of homeownership counseling in the area, and their contact information, is available.

“(9) An explanation of the nature and purpose of escrow accounts when used in connection with loans secured by residential real estate and the requirements under section 10 of this Act regarding such accounts.

“(10) An explanation of the choices available to buyers of residential real estate in selecting persons to provide necessary services incidental to a real estate settlement.

“(11) An explanation of a consumer’s responsibilities, liabilities, and obligations in a mortgage transaction.

“(12) An explanation of the nature and purpose of real estate appraisals, including the difference between an appraisal and a home inspection.

“(13) Notice that the Office of Housing of the Department of Housing and Urban Development has made publicly available a brochure regarding loan fraud and a World Wide Web address and toll-free telephone number for obtaining the brochure.

The booklet prepared pursuant to this section shall take into consideration differences in real estate settlement procedures that may exist among the several States and territories of the United States and among separate political subdivisions within the same State and territory.”;

(3) in subsection (c), by inserting at the end the following new sentence: “Each lender shall also include with the booklet a reasonably complete or updated list of homeownership counselors who are certified pursuant to section 106(e) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)) and located in the area of the lender.”; and

(4) in subsection (d), by inserting after the period at the end of the first sentence the following: “The lender shall provide the HUD-issued booklet in the version that is most appropriate for the person receiving it.”.

SEC. 5. Requirements for FHA-approved mortgagees.

(a) Mortgagee review board.—Paragraph (2) of section 202(c) of the National Housing Act (12 U.S.C. 1708(c)) is amended—

(1) in subparagraph (E), by inserting “and” after the semicolon;

(2) in subparagraph (F), by striking “; and” and inserting a period; and

(3) by striking subparagraph (G).

(b) Limitations on participation and mortgagee approval and use of name.—Section 202 of the National Housing Act (12 U.S.C. 1708) is amended—

(1) by redesignating subsections (d), (e), and (f) as subsections (e), (f), and (g), respectively;

(2) by inserting after subsection (c) the following new subsection:

“(d) Limitations on participation in origination and mortgagee approval.—

“(1) REQUIREMENT.—Any person or entity that is not approved by the Secretary to serve as a mortgagee, as such term is defined in subsection (c)(7), shall not participate in the origination of an FHA-insured loan except as authorized by the Secretary.

“(2) ELIGIBILITY FOR APPROVAL.—In order to be eligible for approval by the Secretary, an applicant mortgagee shall not be, and shall not have any officer, partner, director, principal, manager, supervisor, loan processor, loan underwriter, or loan originator of the applicant mortgagee who is—

“(A) currently suspended, debarred, under a limited denial of participation (LDP), or otherwise restricted under part 24 or 25 of title 24 of the Code of Federal Regulations, or any successor regulations to such parts, or under similar provisions of any other Federal agency;

“(B) under indictment for, or has been convicted of, an offense that reflects adversely upon the applicant’s integrity, competence or fitness to meet the responsibilities of an approved mortgagee;

“(C) subject to unresolved findings contained in a Department of Housing and Urban Development or other governmental audit, investigation, or review;

“(D) engaged in business practices that do not conform to generally accepted practices of prudent mortgagees or that demonstrate irresponsibility;

“(E) convicted of, or who has pled guilty or nolo contendre to, a felony related to participation in the real estate or mortgage loan industry—

“(i) during the 7-year period preceding the date of the application for licensing and registration; or

“(ii) at any time preceding such date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust, or money laundering;

“(F) in violation of provisions of the S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et seq.) or any applicable provision of State law; or

“(G) in violation of any other requirement as established by the Secretary.

“(3) RULEMAKING AND IMPLEMENTATION.—The Secretary shall conduct a rulemaking to carry out this subsection. The Secretary shall implement this subsection not later than the expiration of the 60-day period beginning upon the date of the enactment of this subsection by notice, mortgagee letter, or interim final regulations, which shall take effect upon issuance.”; and

(3) by adding at the end the following new subsection:

“(h) Use of name.—The Secretary shall, by regulation, require each mortgagee approved by the Secretary for participation in the FHA mortgage insurance programs of the Secretary—

“(1) to use the business name of the mortgagee that is registered with the Secretary in connection with such approval in all advertisements and promotional materials, as such terms are defined by the Secretary, relating to the business of such mortgagee in such mortgage insurance programs; and

“(2) to maintain copies of all such advertisements and promotional materials, in such form and for such period as the Secretary requires.”.

(c) Change of status.—The National Housing Act is amended by striking section 532 (12 U.S.C. 1735f–10) and inserting the following new section:

“SEC. 532. Change of mortgagee status.

“(a) Notification.—Upon the occurrence of any action described in subsection (b), an approved mortgagee shall immediately submit to the Secretary, in writing, notification of such occurrence.

“(b) Actions.—The actions described in this subsection are as follows:

“(1) The debarment, suspension of a Limited Denial of Participation (LDP), or application of other sanctions, fines, or penalties applied to the mortgagee or to any officer, partner, director, principal, manager, supervisor, loan processor, loan underwriter, or loan originator of the mortgagee pursuant to applicable provisions of State or Federal law.

“(2) The revocation of a State-issued mortgage loan originator license issued pursuant to the S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et seq.) or any other similar declaration of ineligibility pursuant to State law.”.

(d) Civil money penalties.—Section 536 of the National Housing Act (12 U.S.C. 1735f–14) is amended—

(1) in subsection (b)—

(A) in paragraph (1)—

(i) in the matter preceding subparagraph (A), by inserting “or any of its owners, officers, or directors” after “mortgagee or lender”;

(ii) in subparagraph (H), by striking “title I” and all that follows through “Act of 1989)” and inserting “title I or II”; and

(iii) by inserting after subparagraph (J) the following:

“(K) Violation of section 202(d) of this Act (12 U.S.C. 1708(d)).”; and

(B) in paragraph (2)—

(i) in subparagraph (B), by striking “or” at the end;

(ii) in subparagraph (C), by striking the period at the end and inserting “; or”; and

(iii) by adding at the end the following new subparagraph:

“(D) causing or participating in any of the violations set forth in paragraph (1) of this subsection.”; and

(2) in subsection (g), by striking “The term” and all that follows through the end of the sentence and inserting “For purposes of this section, a person acts knowingly when a person has actual knowledge of acts or should have known of the acts.”.

(e) Expanded review of FHA mortgagee applicants and newly approved mortgagees.—Not later than the expiration of the 3-month period beginning upon the date of the enactment of this Act, the Secretary of Housing and Urban Development shall—

(1) expand the existing process for reviewing new applicants for approval for participation in the mortgage insurance programs of the Secretary for mortgages on 1- to 4-family residences for the purpose of identifying applicants who represent a high risk to the Mutual Mortgage Insurance Fund; and

(2) implement procedures that, for mortgagees approved during the 12-month period ending upon such date of enactment—

(A) expand the number of mortgages originated by such mortgagees that are reviewed for compliance with applicable laws, regulations, and policies; and

(B) include a process for random reviews of such mortgagees and a process for reviews that is based on volume of mortgages originated by such mortgagees.

SEC. 6. Commission on the Foreclosure and Mortgage Lending Crisis.

(a) Establishment of Commission.—There is established in the legislative branch a commission to be known as the “Commission on the Foreclosure and Mortgage Lending Crisis” (in this section referred to as the “Commission”).

(b) Findings and Purpose.—

(1) FINDINGS.—Congress finds the following:

(A) The United States is experiencing a steady increase in foreclosures and mortgage lending problems that have impacted homeowners, families, communities, the United States economy and the global credit markets.

(B) In 2006, there were an estimated 1,300,000 foreclosures in the United States.

(C) This number increased by 79 percent in 2007, bringing the estimated number of foreclosures nationwide to 2,200,000.

(D) In 2008, an estimated 3,200,000 foreclosures were reported.

(E) Estimates suggest that this trend is likely to continue with millions more Americans potentially losing their homes to foreclosure in the next 4 years.

(2) PURPOSE.—The purpose of this section is to establish a commission to undertake a comprehensive analysis and review of the origins and causes of the current foreclosure and mortgage lending crisis and to issue a report of its findings to the Congress. The Commission shall also recommend legislative and regulatory changes that will prohibit the kinds of lending practices that contributed to the increased foreclosure rate and the current mortgage lending crisis.

(c) Composition.—

(1) MEMBERS.—The Commission shall be composed of 10 members as follows:

(A) 2 members shall be appointed by the Speaker of the House of Representatives.

(B) 2 members shall be appointed by the minority leader of the House of Representatives.

(C) 2 members shall be appointed by the majority leader of the Senate.

(D) 2 members shall be appointed by the minority leader of the Senate.

(E) The Secretary of the Treasury or his designee.

(F) The chairman of the Board of Governors of the Federal Reserve System or his designee.

(2) DEADLINE FOR APPOINTMENT.—All members of the Commission shall be appointed not later than 30 days after the date of the enactment of this Act.

(3) CO-CHAIRMEN.—Of the members appointed to the Commission under subparagraphs (A) through (D) of paragraph (1), 2 shall be designated as the co-chairmen of the Commission. One co-chairman shall be designated by the Speaker of the House of Representatives in consultation with the majority leader of the Senate and the other co-chairman shall be designated by the minority leader of the House of Representatives in consultation with the minority leader of the Senate.

(4) VACANCIES.—Any vacancy in the Commission shall not affect its powers, but shall be filled in the same manner in which the original appointment was made.

(5) COMPENSATION.—

(A) IN GENERAL.—Members of the Commission shall serve without pay.

(B) TRAVEL EXPENSES.—While away from their homes or regular places of business in the performance of services for the Commission, members of the Commission shall be allowed travel expenses, including per diem in lieu of subsistence, in the same manner as persons employed intermittently in the Government service are allowed expenses under section 5703(b) of title 5, United States Code.

(6) INITIAL MEETING; RULES OF PROCEDURE; QUORUM.—

(A) INITIAL MEETING.—The Commission shall meet and begin the operations of the Commission not later than 60 days after the date of the enactment of this Act.

(B) MEETINGS.—After its initial meeting, the Commission shall meet upon the call of the co-chairmen or a majority of its members.

(C) QUORUM.—A majority of the members of the Commission shall constitute a quorum.

(D) RULES OF PROCEDURE.—The Commission may establish rules for the conduct of the Commission’s business, if such rules are consistent with this Act or other applicable law.

(d) Duties.—

(1) IN GENERAL.—The Commission shall—

(A) study and assess the current legal and regulatory framework governing the housing mortgage lending markets and investigate how the such framework contributed to the increased foreclosure rate, including—

(i) refinancing practices;

(ii) loan to value ratios; and

(iii) the prevalence of fraudulent industry practices;

(B) recommend changes to the current legal and regulatory framework to prohibit lending practices that have contributed to the mortgage lending crisis;

(C) review the impact of subprime abuses and predatory lending practices;

(D) assess the role of States in enacting policies to reduce predatory lending practices and abuses in the subprime markets;

(E) assess the impact of mortgage backed securities and Fannie Mae and Freddie Mac on the mortgage lending crisis; and

(F) assess the impact of the Community Reinvestment Act on the mortgage lending crisis.

(2) FINAL REPORT.—Not later than 12 months after the date of enactment of this Act, the Commission shall submit to the Congress a final report containing such findings, conclusions, and recommendations as have been agreed to by a majority of Commission members. If, at the conclusion of such 12 month period, a majority of the Commission determines it necessary, the Commission may be granted a 6 month extension for submission of its final report upon written notification to the Congress.

(e) Powers of the Commission.—

(1) HEARINGS AND EVIDENCE.—The Commission, or on the authority of the Commission or any subcommittee or member thereof, may, for the purpose of carrying out this title—

(A) hold such hearings and sit and act at such times and places, take such testimony, receive such evidence, administer such oaths; and

(B) subject to paragraph (2)(A), subpoena or otherwise require, the attendance and testimony of such witnesses and the production of such books, records, correspondence, memoranda, papers, and documents as the Commission or such designated subcommittee or designated member may determine advisable.

(2) SUBPOENAS.—

(A) ISSUANCE.—

(i) IN GENERAL.—A subpoena may be issued under this subsection only—

(I) by a co-chairman; or

(II) by the affirmative vote of a majority of the members of the Commission.

(ii) SIGNATURE.—Subject to clause (i), subpoenas issued under this subparagraph may be issued under the signature of a co-chairman or any member designated by a majority of the Commission, may be served by any person designated by the co-chairmen or by a member designated by a majority of the Commission.

(B) ENFORCEMENT.—

(i) IN GENERAL.—In the case of contumacy or failure to obey a subpoena issued under subparagraph (A), the United States district court for the judicial district in which the subpoenaed person resides, is served, or may be found, or where the subpoena is returnable, may issue an order requiring such person to appear at any designated place to testify or to produce documentary or other evidence. Any failure to obey the order of the court may be punished by the court as a contempt of that court.

(ii) ADDITIONAL ENFORCEMENT.—In the case of any failure of any witness to comply with any subpoena or to testify when summoned under authority of this section, the Commission may, by majority vote, certify a statement of fact constituting such failure to the appropriate United States attorney, who may bring the matter before the grand jury for its action, under the same statutory authority and procedures as if the United States attorney had received as certification under section 102 through 104 of the Revised Statutes of the United States (2 U.S.C. 192 through 194).

(3) CONTRACT AUTHORITY.—The Commission may, to such extent and in such amounts as are provided in appropriation Acts, enter into contracts to enable the Commission to discharge its duties under this section.

(4) INFORMATION FROM FEDERAL AGENCIES.—

(A) IN GENERAL.—The Commission is authorized to secure directly from any executive department, bureau, agency, board, commission, office, independent establishment, or instrumentality of the Government, information, suggestions, estimates, and statistics for the purposes of this section. Each department, bureau, agency, board, commission, office, independent establishment, or instrumentality shall, to the extent authorized by law, furnish such information, suggestions, estimates, and statistics directly to the Commission, upon request made by the co-chairmen of any subcommittee created by a majority of the Commission, or any member designated by a majority of the Commission.

(B) RECEIPT, HANDLING, STORAGE, AND DISSEMINATION.—Information shall only be received, handled, stored, and disseminated by members of the Commission and its staff consistent with all applicable statutes, regulations, and Executive orders.

(5) ASSISTANCE FROM FEDERAL AGENCIES.—

(A) GENERAL SERVICES ADMINISTRATION.—The Administrator of General Services shall provide to the Commission on a reimbursable basis administrative support and other services for the performance of the Commission’s functions.

(B) OTHER DEPARTMENTS AND AGENCIES.—In addition to the assistance described in subparagraph (A), departments and agencies of the United States may provide to the Commission such services, funds, facilities, staff, and other support services as they may determine advisable and as may be authorized by law.

(6) POSTAL SERVICES.—The Commission may use the United States mails in the same manner and under the same conditions as departments and agencies of the United States.

(f) Staff.—

(1) IN GENERAL.—

(A) APPOINTMENT AND COMPENSATION.—The co-chairman, in accordance with rules agreed upon by the Commission, may appoint and fix the compensation of a staff director and such other personnel as may be necessary to enable the Commission to carry out its duties, without regard to the provisions of title 5, United States Code, governing appointments in the competitive service, and without regard to the provisions of chapter 51 and subchapter III of chapter 53 of such title relating to classification and General Schedule pay rates, except that no rate of pay fixed under this subsection may exceed the equivalent of that payable for a position at level IV of the Executive Schedule under section 5316 of title 5, United States Code.

(B) PERSONNEL AS FEDERAL EMPLOYEES.—

(i) IN GENERAL.—The executive director and any personnel of the Commission who are employees shall be employees under section 2105 of title 5, United States Code, for purposes of chapters 63, 81, 83, 84, 85, 87, 89, and 90 of that title.

(ii) MEMBERS OF THE COMMISSION.—Clause (i) shall not apply to members of the Commission.

(2) DETAILEES.—Any Federal Government employee may be detailed to the Commission without reimbursement from the Commission, and such detailee shall retain the rights, status, and privileges of his or her regular employment without interruption.

(3) EXPERT AND CONSULTANT SERVICES.—The Commission is authorized to procure the services of experts and consultants in accordance with section 3109 of title 5, United States Code, but at rates not to exceed the daily rate paid to a person occupying a position at level IV of the Executive Schedule under section 5315 of title 5, United States Code.

(4) VOLUNTEER SERVICES.—Notwithstanding section 1342 of title 31, United States Code, the Commission may accept and use voluntary and uncompensated services as the Commission determines necessary.

(g) Nonapplicability of Federal Advisory Committee Act.—

(1) IN GENERAL.—The Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to the Commission.

(2) PUBLIC MEETINGS AND RELEASE OF PUBLIC VERSIONS OF REPORTS.—The Commission shall—

(A) hold public hearings and meetings to the extent appropriate; and

(B) release public versions of the report required under subsection (d)(2).

(3) PUBLIC HEARINGS.—Any public hearings of the Commission shall be conducted in a manner consistent with the protection of information provided to or developed for or by the Commission as required by any applicable statute, regulations, or Executive order.

(h) Termination.—

(1) IN GENERAL.—The Commission and all the authorities of this section, shall terminate not later than 60 days after the date on which the final report is submitted under subsection (d)(2).

(2) ADMINISTRATIVE ACTIVITIES BEFORE TERMINATION.—The Commission may use the 60-day period referred to in paragraph (1) for the purpose of concluding its activities, including providing testimony to committees of Congress concerning its report and disseminating the final report.

(i) Authorization of appropriation.—There are authorized to be appropriated such sums as necessary to carry out this section.

SEC. 7. Authorization of appropriations for combating mortgage fraud.

For fiscal years 2009, 2010, 2011, 2012, and 2013, there are authorized to be appropriated to the Attorney General a total of—

(1) $31,250,000 to support the employment of 30 additional agents of the Federal Bureau of Investigation and 2 additional dedicated prosecutors at the Department of Justice to coordinate prosecution of mortgage fraud efforts with the offices of the United States Attorneys; and

(2) $750,000 to support the operations of interagency task forces of the Federal Bureau of Investigation in the areas with the 15 highest concentrations of mortgage fraud.

SEC. 8. Enhancement of liquidity and stability of insured depository institutions to ensure availability of credit and reduction of foreclosures.

(a) Permanent increase in deposit insurance.—

(1) AMENDMENTS TO FEDERAL DEPOSIT INSURANCE ACT.—Effective upon the date of the enactment of this Act, section 11(a) of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)) is amended—

(A) in paragraph (1)(E), by striking “$100,000” and inserting “$250,000”;

(B) in paragraph (1)(F)(i), by striking “2010” and inserting “2015”;

(C) in subclause (I) of paragraph (1)(F)(i), by striking “$100,000” and inserting “$250,000”;

(D) in subclause (II) of paragraph (1)(F)(i), by striking “the calendar year preceding the date this subparagraph takes effect under the Federal Deposit Insurance Reform Act of 2005” and inserting “calendar year 2008”; and

(E) in paragraph (3)(A), by striking “, except that $250,000 shall be substituted for $100,000 wherever such term appears in such paragraph”.

(2) AMENDMENT TO FEDERAL CREDIT UNION ACT.—Section 207(k) of the Federal Credit Union Act (12 U.S.C. 1787(k)) is amended—

(A) in paragraph (3)—

(i) by striking the opening quotation mark before “$250,000”;

(ii) by striking “, except that $250,000 shall be substituted for $100,000 wherever such term appears in such section”; and

(iii) by striking the closing quotation mark after the closing parenthesis; and

(B) in paragraph (5), by striking “$100,000” and inserting “$250,000”.

(3) REPEAL OF EESA PROVISION.—Section 136 of the Emergency Economic Stabilization Act (12 U.S.C. 5241) is hereby repealed.

(b) Extension of restoration plan period.—Section 7(b)(3)(E)(ii) of the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(3)(E)(ii)) is amended by striking “5-year period” and inserting “8-year period”.

(c) FDIC and NCUA borrowing authority.—

(1) FDIC.—Section 14(a) of the Federal Deposit Insurance Act (12 U.S.C. 1824(a)) is amended by striking “$30,000,000,000” and inserting “$100,000,000,000”.

(2) NCUA.—Section 203(d)(1) of the Federal Credit Union Act (12 U.S.C. 1783(d)(1)) is amended by striking “$100,000,000” and inserting “$6,000,000,000”.

(d) Expanding systemic risk special assessments.—Section 13(c)(4)(G)(ii) of the Federal Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)(ii)) is amended to read as follows:

“(ii) REPAYMENT OF LOSS.—

“(I) IN GENERAL.—The Corporation shall recover the loss to the Deposit Insurance Fund arising from any action taken or assistance provided with respect to an insured depository institution under clause (i) from 1 or more special assessments on insured depository institutions, depository institution holding companies (with the concurrence of the Secretary of the Treasury with respect to holding companies), or both, as the Corporation determines to be appropriate.

“(II) TREATMENT OF DEPOSITORY INSTITUTION HOLDING COMPANIES.—For purposes of this clause, sections 7(c)(2) and 18(h) shall apply to depository institution holding companies as if they were insured depository institutions.

“(III) REGULATIONS.—The Corporation shall prescribe such regulations as it deems necessary to implement this clause. In prescribing such regulations, defining terms, and setting the appropriate assessment rate or rates, the Corporation shall establish rates sufficient to cover the losses incurred as a result of the actions of the Corporation under clause (i) and shall consider: the types of entities that benefit from any action taken or assistance provided under this subparagraph; economic conditions, the effects on the industry, and such other factors as the Corporation deems appropriate and relevant to the action taken or the assistance provided. Any funds so collected that exceed actual losses shall be placed in the Deposit Insurance Fund.”.

(e) Establishment of a national credit union share insurance fund restoration plan period.—Section 202(c)(2) of the Federal Credit Union Act (12 U.S.C. 1782(c)(2)) is amended by adding at the end the following new subparagraph:

“(D) FUND RESTORATION PLANS.—

“(i) IN GENERAL.—Whenever—

“(I) the Board projects that the equity ratio of the Fund will, within 6 months of such determination, fall below the minimum amount specified in subparagraph (C) for the designated equity ratio; or

“(II) the equity ratio of the Fund actually falls below the minimum amount specified in subparagraph (C) for the equity ratio without any determination under sub-clause (I) having been made,

the Board shall establish and implement a Share Insurance Fund restoration plan within 90 days that meets the requirements of clause (ii) and such other conditions as the Board determines to be appropriate.

“(ii) REQUIREMENTS OF RESTORATION PLAN.—A Share Insurance Fund restoration plan meets the requirements of this clause if the plan provides that the equity ratio of the Fund will meet or exceed the minimum amount specified in subparagraph (C) for the designated equity ratio before the end of the 5-year period beginning upon the implementation of the plan (or such longer period as the Board may determine to be necessary due to extraordinary circumstances).

“(iii) TRANSPARENCY.—Not more than 30 days after the Board establishes and implements a restoration plan under clause (i), the Board shall publish in the Federal Register a detailed analysis of the factors considered and the basis for the actions taken with regard to the plan.”.

SEC. 9. Prohibition on the receipt of common stock and the exercise of stock voting power.

Title I of the Emergency Economic Stabilization Act of 2008 is amended by adding at the end the following new section:

“SEC. 137. Prohibition on the receipt of common stock and the exercise of stock voting power.

“(a) In general.—Notwithstanding any other provision of this title, in carrying out this title the Secretary shall not make any purchase for which the Secretary receives control-diluting stock.

“(b) Application.—Subsection (a) shall apply to purchases made by the Secretary under this title on or after the date of the enactment of this section.

“(c) Conversion of certain securities received by the Secretary.—Notwithstanding any other provision of this title, the Secretary shall not convert any security received by the Secretary under this title, other than a warrant, into control-diluting stock.

“(d) Control-diluting stock defined.—For purposes of this section, the term ‘control-diluting stock’ means—

“(1) common stock of a financial institution;

“(2) any other voting stock of a financial institution, other than voting stock that the Secretary agrees not to exercise the voting power of such stock; or

“(3) a warrant giving the right to the Secretary to receive stock described in paragraph (1) or (2).”.

SEC. 10. Treatment of gain on disposition of subsidized residences.

(a) In general.—In the case any taxpayer who holds (at the time of the provision of the relief or assistance described in subsection (b)) any interest in a subsidized residence—

(1) section 121 of the Internal Revenue Code of 1986 (relating to exclusion of gain from sale of principal residence) shall not apply to any gain from the sale or exchange of such interest, and

(2) the rate of tax under section 1 of such Code on such gain shall be twice the rate which would otherwise apply.

(b) Subsidized residence.—For purposes of this section, the term “subsidized residence” means any residence that is subject to a mortgage with respect to which relief or assistance is provided under this Act or any amendment made by this Act, under any authority or program established or amended by this Act, or by any financial institution subject to the amendments made by section 204.

SEC. 11. Refundable tax credit for residences purchased during 2009 or 2010.

(a) In General.—Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to refundable credits) is amended by inserting after section 36 the following new section:

“SEC. 36A. General homebuyer credit for residences purchased during 2009 or 2010.

“(a) Allowance of Credit.—In the case of an individual who makes an eligible purchase during the taxable year, there shall be allowed as a credit against the tax imposed by this subtitle for such taxable year an amount equal to so much of the purchase price as does not exceed the applicable amount.

“(b) Applicable Amount.—For purposes of subsection (a), the applicable amount is—

“(1) $10,000 in the case of an eligible purchase where the down payment is at least 15 percent of the purchase price,

“(2) $5,000 in the case of an eligible purchase where the down payment is at least 10 percent of the purchase price,

“(3) $2,000 in the case of an eligible purchase where the down payment is at least 5 percent of the purchase price, and

“(4) zero in any other case.

“(c) Definitions.—For purposes of this section—

“(1) ELIGIBLE PURCHASE.—The term ‘eligible purchase’ means the purchase of a residence for the taxpayer if—

“(A) such residence is located in the United States,

“(B) the construction of such residence began before 2009, and

“(C) such purchase is made by the taxpayer during 2009 or 2010.

“(2) OTHER DEFINITIONS.—The terms ‘purchase’ and ‘purchase price’ have the respective meanings given such terms by section 26(c).

“(d) Exceptions.—No credit shall be allowed under subsection (a) to any taxpayer for any taxable year with respect to the purchase of a residence if—

“(1) credit under section 36 (relating to first-time homebuyer credit) or 1400C (relating to first-time homebuyer in the District of Columbia) is allowed to the taxpayer (or the taxpayer’s spouse) for such taxable year or any prior taxable year,

“(2) the residence is financed by the proceeds of a qualified mortgage issue the interest on which is exempt from tax under section 103,

“(3) the taxpayer is a nonresident alien, or

“(4) the taxpayer disposes of such residence (or such residence ceases to be a residence of the taxpayer (or, if married, the taxpayer’s spouse)) before the close of such taxable year.

“(e) Other Rules To Apply.—

“(1) RELATED PERSONS.—Rules similar to the rules of section 26(c)(5) shall apply for purposes of this section.

“(2) MARRIED INDIVIDUALS FILING SEPARATE RETURNS, ETC.—Rules similar to the rules of subparagraphs (B) and (C) of section 26(b)(1) shall apply for purposes of this section.

“(3) REPORTING.—Rules similar to the rules of section 26(e) shall apply for purposes of this section.

“(f) Recapture of Credit.—Rules similar to the rules of section 26(f) shall apply for purposes of this section, except that—

“(1) paragraph (1) thereof shall be applied by substituting ‘3313 percent’ for ‘623 percent’, and

“(2) paragraph (7) thereof shall be applied by substituting ‘3 years’ for ‘15 years’.”.

(b) Conforming Amendments.—

(1) Section 26(b)(2) of such Code is amended—

(A) in subparagraph (W)—

(i) by striking “homebuyer credit” and inserting “first-time homebuyer credit”, and

(ii) by striking “and”,

(B) by striking the period at the end of subparagraph (X) and inserting “, and”, and

(C) by inserting after subparagraph (X) the following new subparagraph:

“(Y) section 36A(f) (relating to recapture of general homebuyer credit)”.

(2) Section 6211(b)(4)(A) of such Code is amended by inserting “36A,” after “36,”.

(3) Section 1324(b)(2) of title 31, United States Code, is amended by inserting “36A,” after “36,”.

(4) The table of sections for subpart C of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 36 the following new item:


“Sec. 36A. General homebuyer credit for residences purchased during 2009 or 2010.”.


(c) Effective Date.—The amendments made by this section shall apply to residences purchased after December 31, 2008, in taxable years ending after such date.

SEC. 12. Conditions on mortgage relief.

Notwithstanding any other provision of this Act or any amendment made by this Act, no relief or assistance may be provided under this Act or any such amendment, under any authority or program established or amended by this Act, or by any financial institution subject to the amendments made by section 8 of this Act, to or on behalf of any mortgagor unless, before such assistance is provided the agency or entity providing such relief or assistance makes a determination that—

(1) the mortgagor’s income was accurately stated on the application for the original mortgage in connection with which such relief or assistance is being provided;

(2) the residential property that is subject to the original mortgage in connection with such relief or assistance is being provided is the principal residence of the mortgagor;

(3) the mortgagor has never been convicted under Federal or State law for financial fraud; and

(4) the mortgagor is a citizen or national of the United States or an alien lawfully admitted for permanent residence in the United States.