Text: S.3509 — 116th Congress (2019-2020)All Information (Except Text)

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Introduced in Senate (03/17/2020)


116th CONGRESS
2d Session
S. 3509


To provide borrowers the right to request forbearance on mortgage loan payments due to a declared disaster, and for other purposes.


IN THE SENATE OF THE UNITED STATES

March 17, 2020

Mr. Brown introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs


A BILL

To provide borrowers the right to request forbearance on mortgage loan payments due to a declared disaster, 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. Consumer right to request forbearance.

The Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) is amended—

(1) in section 3 (12 U.S.C. 2602)—

(A) in paragraph (8), by striking “and” at the end;

(B) in paragraph (9), by striking the period at the end and inserting “; and”; and

(C) by adding at the end the following:

“(10) the term ‘declared disaster’ means—

“(A) the coronavirus disease (COVID–19) pandemic; and

“(B) a major disaster or emergency declared by the President under section 401 or 501, respectively, of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170, 5191).”; and

(2) in section 6 (12 U.S.C. 2605)—

(A) in subsection (k)(1)—

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

(ii) by redesignating subparagraph (E) as subparagraph (G); and

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

“(E) initiate any judicial or non-judicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction or foreclosure sale during the 180-day period following a declared disaster in the area in which the property is located;

“(F) fail to toll the time in a foreclosure process on a property for not less than 180 days following a declared disaster in the area in which the property is located; or”; and

(B) by adding at the end the following:

“(n) Consumer right To request forbearance.—

“(1) IN GENERAL.—A borrower experiencing a financial hardship due, directly or indirectly, to a declared disaster may request forbearance from any mortgage payment for not less than 180 days, which may be extended for an additional 180 days at the request of the borrower, provided that, at the borrower's request, either the initial or extended period of forbearance may be shortened.

“(2) ACCRUAL OF INTEREST OR FEES.—During a period of forbearance described in paragraph (1), no interest or other fees shall accrue on the borrower’s account.

“(3) REQUEST FOR RELIEF.—A borrower may submit a request for forbearance under paragraph (1) to their servicer, either orally or in writing, affirming that the borrower is experiencing hardship due, directly or indirectly, to a declared disaster.

“(4) REQUIREMENTS FOR SERVICERS.—

“(A) NOTIFICATION.—

“(i) IN GENERAL.—Each servicer of a federally related mortgage loan shall notify the borrower of their right to request forbearance under paragraph (3)—

“(I) not later than 14 days after the date of a declared disaster or, in the case of the coronavirus disease (COVID–19) pandemic, not later than 14 days after the date of enactment of this Act; and

“(II) during the incident period for a declared disaster and during not less than the 180-day period following that incident period—

“(aa) on each periodic statement provided to the borrower; and

“(bb) in any oral or written communication by the servicer with or to the borrower.

“(ii) MANNER OF NOTIFICATION.—

“(I) WRITTEN NOTIFICATION.—Any written notification required under clause (i)—

“(aa) shall be provided—

“(AA) in English and Spanish and in any additional languages in which the servicer communicates, including the language in which the loan was negotiated, to the extent known by the servicer; and

“(BB) at least as clearly and conspicuously as the most clear and conspicuous disclosure on the document; and

“(bb) may be provided by first-class mail or electronically, if the borrower has otherwise consented to electronic communication with the servicer and has not revoked such consent.

“(II) ORAL NOTIFICATION.—Any oral notification required under clause (i) shall be provided in the language the servicer otherwise uses to communicate with the borrower.

“(III) WRITTEN TRANSLATIONS.—In providing written notifications in languages other than English under subclause (I), a servicer may rely on written translations developed by the Federal Housing Finance Agency or the Bureau.

“(B) OTHER REQUIREMENTS.—Upon receiving a request for forbearance from a consumer under paragraph (3), a servicer shall—

“(i) with no additional documentation required other than the borrower’s attestation to a hardship caused by the declared disaster and with no fees, interest, or other penalties charged to the borrower in connection with the forbearance, provide the forbearance for not less than 180 days, which may be extended for an additional 180 days at the request of the borrower, provided that, at the borrower's request, either the initial or extended period of forbearance may be shortened;

“(ii) while such forbearance is in effect, pay or advance funds to make disbursements in a timely manner from any escrow account established on the mortgage loan, and maintain regular communication with such borrower; and

“(iii) (I) before the end of such forbearance, evaluate the borrower’s ability to return to making regular mortgage payments;

“(II) if the borrower is able to return to making regular mortgage payments at the end of the forbearance period—

“(aa) modify the borrower’s loan to extend the term for the same period as the length of the forbearance, with all payments that were not made during the forbearance distributed at the same intervals as the borrower’s existing payment schedule and evenly distributed across those intervals, with no penalties or additional interest accrued or modification fee charged to the borrower; and

“(bb) notify the borrower in writing of the extension, including provision of a new payment schedule and date of maturity, and that the borrower shall have the election of prepaying the forborne payments at any time, in a lump sum or otherwise;

“(III) if the borrower is financially unable to return to making regular mortgage payments at the end of the forbearance period—

“(aa) evaluate the borrower for all loan modification options, including—

“(AA) further extending the borrower’s repayment period;

“(BB) reducing the principal balance of the loan; or

“(CC) other modification options available to the servicer under the terms of their loan and existing laws and policies; and

“(bb) if the borrower qualifies for such a modification, modify the borrower’s loan to provide a loan with such terms as to provide an affordable payment, with no penalties, additional interest, or modification fees charged to the borrower; and

“(IV) if a borrower is granted a forbearance on payments that would be owed pursuant to a trial loan modification plan—

“(aa) any forbearance of payments shall not be treated as missed or delinquent payments or otherwise negatively affect the borrower's ability to complete their trial plan; and

“(bb) any past due amounts as of the end of the trial period, including unpaid interest, real estate taxes, insurance premiums, and assessments paid on the borrower’s behalf, will be added to the mortgage loan balance, but only to the extent that such charges are not fees associated with the granting of the forbearance, such as late fees, modification fees, or unpaid interest from the period of the forbearance.”.


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