April 3, 2008, 12:00 am ET - Amendment SA 4388 proposed by Senator Durbin to Amendment SA 4387.
April 3, 2008, 3:37 pm ET - On the Motion to Table (Motion to Table Durbin Amdt. No. 4388)
Full Text of this Amendment
greater energy independence and security, developing innovative new technologies, reducing carbon emissions, creating green jobs, protecting consumers, increasing clean renewable energy production, and modernizing our energy infrastructure, and to amend the Internal Revenue Code of 1986 to provide tax incentives for the production of renewable energy and energy conservation; which was ordered to lie on the table; as follows:
At the end, add the following:
SEC. __1. SHORT TITLE.
This title may be cited as the ``Helping Families Save Their Homes in Bankruptcy Act of 2008''.
Subtitle A--Minimizing Foreclosures
SEC. __21. DEFINITIONS.
Section 101 of title 11, United States Code, is amended--
(1) by redesignating paragraphs (40A) and (40B) as paragraphs (40B) and (40C), respectively;
(2) by inserting after paragraph (40) the following:
``(40A) The term `nontraditional mortgage' means a security interest in the debtor's principal residence that secures a debt for a loan that at any period during the term of the loan provides for the deferral of payment of principal or interest through permitting periodic payments that do not cover the full amount of interest due or that cover only the interest due, except that such term excludes--
``(A) a loan that at any period during the term of the loan provides for the deferral of payment of principal through permitting periodic payments that cover only the interest due, if the creditor demonstrates that it determined in good faith at the time the loan was consummated, after undergoing a full underwriting process based on verified and documented information, that the debtor had a reasonable ability to repay at the full interest and principal
payment amount (assuming an initial 30 year full amortization), and payments under the loan resulted in a debt-to-income ratio of the debtor in an amount equal to or less than that which would have been permitted under guidelines and directives established by the Secretary of Housing and Urban Development pursuant to section 203.33 of title 24, Code of Federal Regulations, for loans subject to such section;
``(B) a home equity line of credit that is in a subordinate lien position; and
``(C) a reverse mortgage.'';
(3) by redesignating paragraphs (53B) through (53D) as paragraphs (53C), (53D), (53E), and (53F), respectively; and
(4) by inserting after paragraph (53A) the following:
``(53B) The term `subprime mortgage' means a security interest in the debtor's principal residence that secures a debt for a loan that has an annual percentage rate that is greater than--
``(A) the sum of 3 percent plus the yield on United States Treasury securities having comparable periods of maturity, if the loan is secured by a first mortgage or first deed of trust; or
``(B) the sum of 5 percent plus the yield on United States Treasury securities having comparable periods of maturity, if the loan is secured by a subordinate mortgage or subordinate deed of trust.
Without regard to whether such loan is subject to or reportable under the Home Mortgage Disclosure Act, the difference between the annual percentage rate of such loan and the yield on United States Treasury securities having comparable periods of maturity shall be determined using the procedures and calculation methods applicable to loans that are subject to the reporting requirements of such Act, except that such yield shall be determined as of the 15th day of the month preceding the month in
which a completed application is submitted for such loan. If such loan provides for a fixed interest rate for an introductory period and then resets or adjusts to a variable interest rate, the determination of the annual percentage rate shall be based on the greater of the introductory
rate and the fully indexed rate. For purposes of this paragraph, the term `fully indexed rate' means the prevailing index rate on a residential mortgage loan at the time at which the loan is made, plus the margin that will apply after the expiration of an introductory interest rate.''.
SEC. __22. SPECIAL RULES FOR MODIFICATION OF LOANS SECURED BY RESIDENCES.
(a) In General.--Section 1322(b) of title 11, United States Code, is amended--
(1) in paragraph (10), by striking ``and'' at the end;
(2) by redesignating paragraph (11) as paragraph (12); and
(3) by inserting after paragraph (10) the following:
``(11) notwithstanding paragraph (2) and otherwise applicable nonbankruptcy law--
``(A) modify an allowed secured claim for a debt incurred prior to the effective date of this paragraph secured by a nontraditional mortgage, or a subprime mortgage, and any lien subordinate to such claim, on the debtor's principal residence, as described in subparagraph (B), if, after deduction from the debtor's current monthly income of the expenses permitted for debtors described in section 1325(b)(3) of this title (other than amounts contractually due to creditors holding such allowed secured
claims and additional payments necessary to maintain possession of that residence), the debtor has insufficient remaining income to retain possession of the residence by curing a default and maintaining payments while the case is pending, as provided under paragraph (5);
``(B) provide for payment of such claim--
``(i) in an amount equal to the amount of the allowed secured claim;
``(ii) for a period that is the longer of 30 years (reduced by the period for which the loan has been outstanding) or the remaining term of such loan, beginning on the date of the order for relief under this chapter; and
``(iii) at a rate of interest accruing after such date calculated at a fixed annual percentage rate, in an amount equal to the most recently published annual yield on conventional mortgages published by the Board of Governors of the Federal Reserve System, as of the applicable time set forth in the rules of the Board, plus a reasonable premium for risk; and
``(C) if a claim has been modified to an amount below the original principal of the loan pursuant to subparagraph (B)(i) and the debtor's principal residence is sold during the term of the plan, the holder of the claim shall be entitled to receive, in addition to the unpaid portion of the allowed secured claim, the net proceeds of the sale, or the amount of the holder's allowed unsecured claim, whichever is less; and''.
(b) Conforming Amendment.--Section 1325(a)(5) of title 11, United States Code, is amended by inserting before ``with respect'' the following: ``except as otherwise provided in section 1322(b)(11) of this title,''.
SEC. __23. WAIVER OF COUNSELING REQUIREMENT WHEN HOMES ARE IN FORECLOSURE.
Section 109(h) of title 11, United States Code, is amended by adding at the end the following:
``(5) Paragraph (1) shall not apply with respect to a debtor who files with the court a certification that a foreclosure sale of the debtor's principal residence has been scheduled.''.
Subtitle B--Providing Other Debtor Protections
SEC. __41. COMBATING EXCESSIVE FEES.
Section 1322(c) of title 11, the United States Code, is amended--
(1) in paragraph (1), by striking ``and'' at the end;
(2) in paragraph (2), by striking the period at the end and inserting a semicolon; and
(3) by adding at the end the following:
``(3) the plan need not provide for the payment of, and the debtor, the debtor's property, and property of the estate shall not be liable for, any fee, cost, or charge, notwithstanding section 506(b), that arises in connection with a claim secured by the debtor's principal residence if the event that gives rise to such fee, cost, or charge occurs while the case is pending but before the discharge order, except to the extent that--
``(A) notice of such fees, costs or charges is filed with the court, and served on the debtor and the trustee, before the expiration of the earlier of--
``(i) 1 year after the event that gives rise to such fee, cost, or charge occurs; or
``(ii) 60 days before the closing of the case; and
``(B) such fees, costs, or charges are lawful, reasonable, and provided for in the agreement under which such claim or security interest arose;
``(4) the failure of a party to give notice described in paragraph (3) shall be deemed a waiver of any claim for fees, costs, or charges described in paragraph (3) for all purposes, and any attempt to collect such fees, costs, or charges shall constitute a violation of section 524(a)(2) of this title or, if the violation occurs before the date of discharge, of section 362(a) of this title; and
``(5) a plan may provide for the waiver of any prepayment penalty on a claim secured by the principal residence of the debtor.''.
SEC. __42. MAINTAINING DEBTORS' LEGAL CLAIMS.
Section 554(e) of title 11, United States Code, is amended by adding at the end the following:
``(e) In any action in State or Federal court with respect to a claim or defense asserted by an individual debtor in such action that was not scheduled under section 521(a)(1) of this title, the trustee shall be allowed a reasonable time to request joinder or substitution as the real party in interest. If the trustee does not request joinder or substitution in such action, the debtor may proceed as the real party in interest, and no such action shall be dismissed on the ground that it is not
prosecuted in the name of the real party in interest or on the ground that the debtor's claims were not properly scheduled in a case under this title.''.
SEC. __43. RESOLVING DISPUTES.
Section 1334 of title 28, United States Code, is amended by adding at the end the following: ``Notwithstanding any agreement for arbitration that is subject to chapter 1 of title 9, in any core proceeding under section 157(b) of this title involving an individual debtor whose debts are primarily consumer debts, the court may hear and determine the proceeding, and enter appropriate orders and judgments, in lieu of referral to arbitration.''.
SEC. __44. ENACTING A HOMESTEAD FLOOR FOR DEBTORS OVER 55 YEARS OF AGE.
(a) In General.--Section 522(b)(3) of title 11, United States Code, is amended--
(1) in subparagraph (B), by striking ``and'' at the end;
(2) in subparagraph (C), by striking the period at the end and inserting ``; and''; and
(3) by adding at the end and inserting the following:
``(D) if the debtor, as of the date of the filing of the petition, is 55 years old or older, the debtor's aggregate interest, not to exceed $75,000 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a principal residence, or in a cooperative that owns property that the debtor or a dependent of the debtor uses as a principal residence.''.
(b) Exemption Authority.--Section 522(d)(1) of title 11, United States Code, is amended by inserting ``or, if the debtor is 55 years of age or older, $75,000 in value,'' before ``in real property''.
SEC. __45. DISALLOWING CLAIMS FROM VIOLATIONS OF CONSUMER PROTECTION LAWS.
Section 502(b) of title 11, United States Code, is amended--
(1) in paragraph (8), by striking ``or'' at the end;
(2) in paragraph (9), by striking the period at the end and inserting ``; or''; and
(3) by adding at the end the following:
``(10) the claim is subject to any remedy for damages or rescission due to failure to comply with any applicable requirement under the Truth in Lending Act (15 U.S.C. 1601 et seq.), or any other provision of applicable State or Federal consumer protection law that was in force when the noncompliance took place, notwithstanding the prior entry of a foreclosure judgment.''.
(As printed in the Congressional Record for the Senate on Apr 3, 2008.)