SINGLE FAMILY CLAIMS REFORM AND SALE OF PROPERTY.

SEC. 601. SINGLE FAMILY CLAIMS REFORM AND SALE OF PROPERTY. (a) Revision of Claims Procedures.— Section 204 112 STAT. 2671 of the National Housing Act (12 U.S.C. 1710) is amended by striking “Sec. 204.” and all that follows through the end of subsection (a) and inserting the following: “SEC. 204. (a) In General.— “(1) Authorized claims procedures.— The Secretary may, in accordance with this subsection and terms and conditions prescribed by the Secretary, pay insurance benefits to a mortgagee for any mortgage insured under section 203 through any of the following methods: “(A) Assignment of mortgage.— The Secretary may pay insurance benefits whenever a mortgage has been in a monetary default for not less than 3 full monthly installments or whenever the mortgagee is entitled to foreclosure for a nonmonetary default. Insurance benefits shall be paid pursuant to this subparagraph only upon the assignment, transfer, and delivery to the Secretary of— “(i) all rights and interests arising under the mortgage; “(ii) all claims of the mortgagee against the mortgagor or others arising out of the mortgage transaction; “(iii) title evidence satisfactory to the Secretary; and “(iv) such records relating to the mortgage transaction as the Secretary may require. “(B) Conveyance of title to property.— The Secretary may pay insurance benefits if the mortgagee has acquired title to the mortgaged property through foreclosure or has otherwise acquired such property from the mortgagor after a default upon— “(i) the prompt conveyance to the Secretary of title to the property which meets the standards of the Secretary in force at the time the mortgage was insured and which is evidenced in the manner provided by such standards; and “(ii) the assignment to the Secretary of all claims of the mortgagee against the mortgagor or others, arising out of mortgage transaction or foreclosure proceedings, except such claims as may have been released with the consent of the Secretary. The Secretary may permit the mortgagee to tender to the Secretary a satisfactory conveyance of title and transfer of possession directly from the mortgagor or other appropriate grantor, and may pay to the mortgagee the insurance benefits to which it would otherwise be entitled if such conveyance had been made to the mortgagee and from the mortgagee to the Secretary. “(C) Claim without conveyance of title.— The Secretary may pay insurance benefits upon sale of the mortgaged property at foreclosure where such sale is for at least the fair market value of the property (with appropriate adjustments), as determined by the Secretary, and upon assignment to the Secretary of all claims referred to in clause (ii) of subparagraph (B). “(D) Preforeclosure sale.— The Secretary may pay insurance benefits upon the sale of the mortgaged property by the mortgagor after default and the assignment to the 112 STAT. 2672 Secretary of all claims referred to in clause (ii) of subparagraph (B), if— “(i) the sale of the mortgaged property has been approved by the Secretary; “(ii) the mortgagee receives an amount at least equal to the fair market value of the property (with appropriate adjustments), as determined by the Secretary; and “(iii) the mortgagor has received an appropriate disclosure, as determined by the Secretary. (2) Payment for loss mitigation.— The Secretary may pay insurance benefits to the mortgagee to recompense the mortgagee for all or part of any costs of the mortgagee for taking loss mitigation actions that provide an alternative to foreclosure of a mortgage that is in default (including but not limited to actions such as special forbearance, loan modification, and deeds in lieu of foreclosure, but not including assignment of mortgages to the Secretary under section 204(a)(1)(A)). No actions taken under this paragraph, nor any failure to act under this paragraph, by the Secretary or by a mortgagee shall be subject to judicial review. “(3) Determination of claims procedure.— The Secretary shall publish guidelines for determining which of the procedures for payment of insurance under paragraph (1) are available to a mortgagee when it claims insurance benefits. At least one of the procedures for payment of insurance benefits specified in paragraph (1)(A) or (1)(B) shall be available to a mortgagee with respect to a mortgage, but the same procedure shall not be required to be available for all of the mortgages held by a mortgagee. “(4) Servicing of assigned mortgages.— If a mortgage is assigned to the Secretary under paragraph (1)(A), the Secretary may permit the assigning mortgagee or its servicer to continue to service the mortgage for reasonable compensation and on terms and conditions determined by the Secretary. Neither the Secretary nor any servicer of the mortgage shall be required to forbear from collection of amounts due under the mortgage or otherwise pursue loss mitigation measures. “(5) Calculation of insurance benefits.— Insurance benefits shall be paid in accordance with section 520 and shall be equal to the original principal obligation of the mortgage (with such additions and deductions as the Secretary determines are appropriate) which was unpaid upon the date of— “(A) assignment of the mortgage to the Secretary; “(B) the institution of foreclosure proceedings; “(C) the acquisition of the property after default other than by foreclosure; or “(D) sale of the mortgaged property by the mortgagor. “(6) Forbearance and recasting after default.— The mortgagee may, upon such terms and conditions as the Secretary may prescribe— “(A) extend the time for the curing of the default and the time for commencing foreclosure proceedings or for otherwise acquiring title to the mortgaged property, to such time as the mortgagee determines is necessary and desirable to enable the mortgagor to complete the mortgage payments, including an extension of time beyond the stated maturity of the mortgage, and in the event of a subsequent 112 STAT. 2673 foreclosure or acquisition of the property by other means the Secretary may include in the amount of insurance benefits an amount equal to any unpaid mortgage interest; or “(B) provide for a modification of the terms of the mortgage for the purpose of recasting, over the remaining term of the mortgage or over such longer period pursuant to guidelines as may be prescribed by the Secretary, the total unpaid amount then due, with the modification to become effective currently or to become effective upon the termination of an agreed-upon extension of the period for curing the default; and the principal amount of the mortgage, as modified, shall be considered the ‘original principal obligation of the mortgage’ for purposes of paragraph (5). “(7) Termination of premium obligation.— The obligation of the mortgagee to pay the premium charges for insurance shall cease upon fulfillment of the appropriate requirements under which the Secretary may pay insurance benefits, as described in paragraph (1). The Secretary may also terminate the mortgagee’s obligation to pay mortgage insurance premiums upon receipt of an application filed by the mortgagee for insurance benefits under paragraph (1), or in the event the contract of insurance is terminated pursuant to section 229. “(8) Effect on payment of insurance benefits under section 230.— Nothing in this section shall limit the authority of the Secretary to pay insurance benefits under section 230. “(9) Treatment of mortgage assignment program.— Notwithstanding any other provision of law, or the Amended Stipulation entered as a consent decree on November 8, 1979, in Ferrell v. Cuomo, No. 73 C 334 (N.D. III.), or any other order intended to require the Secretary to operate the program of mortgage assignment and forbearance that was operated by the Secretary pursuant to the Amended Stipulation and under the authority of section 230, prior to its amendment by section 407(b) of The Balanced Budget Downpayment Act, I (Public Law 104–99; 110 Stat. 45), no mortgage assigned under this section may be included in any mortgage foreclosure avoidance program that is the same or substantially equivalent to such a program of mortgage assignment and forbearance.”. (b) Effective Date.— The Secretary shall publish a notice in the Federal Register stating the effective date of the terms and conditions prescribed by the Secretary under section 204(a)(1) of the National Housing Act, as amended by subsection (a) of this section. Subsections (a) and (k) of section 204 of the National Housing Act, as in effect immediately before such effective date, shall continue to apply to any mortgage insured under section 203 of the National Housing Act before such effective date, except that the Secretary may, at the request of the mortgagee, pay insurance benefits as provided in subparagraphs (A) and (D) of section 204(a)(1) of such Act to calculate insurance benefits in accordance with section 204(a)(5) of such Act. (c) Repeal of Redundant Provision.— Subsection (k) of section 204 of the National Housing Act (12 U.S.C. 1710(k)) is hereby repealed. (d) Authority To Sell.— Section 204(g) of the National Housing Act (12 U.S.C. 1710(g)) is amended by adding at the end 112 STAT. 2674the following new sentence: “The Secretary may sell real and personal property acquired by the Secretary pursuant to the provisions of this Act on such terms and conditions as the Secretary may prescribe.”. (e) Authority To Insure Mortgage.— Section 223(c) of the National Housing Act (12 U.S.C. 1715n(c)) is amended— (1) by striking “him” each place it appears and inserting “the Secretary”; and (2) by inserting before “of any property acquired”, the following: “, including a sale through another entity acting under authority of the fourth sentence of section 204(g),”. (f) Loss Mitigation.— Section 230 of the National Housing Act is amended— (1) by redesignating subsections (a) through (e) as (b) through (f); and (2) by inserting a new subsection (a) as follows: “(a) Upon default of any mortgage insured under this title, mortgagees shall engage in loss mitigation actions for the purpose of providing an alternative to foreclosure (including but not limited to actions such as special forbearance, loss modification, and deeds in lieu of foreclosure, but not including assignment of mortgages to the Secretary under section 204(a)(1)(A)) as provided in regulations by the Secretary.”. (g) Penalty.— Section 536(a) of the National Housing Act is amended by inserting at the end of paragraph (2) the following: “In the case of the mortgagee’s failure to engage in loss mitigation activities, as provided in section 536(b)(1)(I), the penalty shall be in the amount of three times the amount of any insurance benefits claimed by the mortgagee with respect to any mortgage for which the mortgagee failed to engage in such loss mitigation actions.”. (h) Violation.— Section 536(b)(1) of the National Housing Act is amended by inserting after subparagraph (h) the following: “(I) Failure to engage in loss mitigation actions as provided in section 230(a) of this Act.”.