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Full Text of this Amendment

SA 4408. Mr. SPECTER submitted an amendment intended to be proposed by him to the bill H.R. 3221, moving the United States toward greater energy independence and security, developing innovative new technologies, reducing carbon emissions, creating green jobs, protecting consumers, increasing clean renewable energy production, and modernizing our energy infrastructure, and to amend the Internal Revenue Code of 1986 to provide tax incentives for the production of renewable energy and energy conservation;
which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:

Section 6 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605) is amended--

(1) by redesignating subsections (i) and (j) as subsections (j) and (k), respectively; and

(2) by inserting after subsection (h) the following:

``(i) Duty of Servicers Regarding Certain Loan Modifications or Workout Plans.--

``(1) In general.--Notwithstanding any other provision of law, absent specific contractual provisions to the contrary, a servicer of pooled qualified residential mortgages--

``(A) owes any duty to determine if the net present value of the payments on the loan as modified is likely to be greater than the anticipated net recovery that would result from foreclosure to all investors and parties having a direct or indirect interest in the pooled loans or securitization vehicle, but not to any individual party or group of parties; and

``(B) acts in the best interests of all such investors and parties, if the servicer agrees to or implements a qualified loan modification or workout plan for a qualified residential mortgage, or if, and only if, such efforts are unsuccessful or infeasible, takes other reasonable loss mitigation actions, including accepting partial payments or short sale of the property; and

``(C) if the servicer acts in a manner consistent with the duty set forth in subparagraphs (A) and (B), shall not be liable under any law or regulation of the United States, any State or any political subdivision of any State, for entering into a qualified loan modification or workout plan in any action filed by or on behalf of any person--

``(i) based on the person's ownership of any interest in a residential mortgage, a pool of residential mortgage loans, or a securitization vehicle, that distributes payments out of the principal, interest, or other payment on loans in the pool;

``(ii) based on the person's obligation to make payments determined in reference to any loan or interest referred to in clause (i); or

``(iii) based on the person's obligation to insure any loan or any interest referred to in clause (i).

``(2) Definitions.--As used in this subsection--

``(A) the term `qualified loan modification or workout plan' means a contract, modification, or plan relating to a qualified residential mortgage loan consummated after January 1, 2004, with respect to which--

``(i) payment default on the loan or loans has occurred, is imminent, or is reasonably foreseeable;

``(ii) the dwelling securing the loan or loans is the primary residence of the owner;

``(iii) the servicer reasonably believes that the anticipated recovery under the loan modification or workout plan will exceed the anticipated recovery through foreclosure, on a net present value basis;

``(iv) the effective period runs for at least 5 years from the date of adoption of the plan, or until the borrower sells or refinances the property, if that occurs earlier; and

``(v) the borrower is not required to pay additional fees to the servicer;

``(B) the term `qualified residential mortgage' means a consumer credit transaction or loan that is secured by the consumer's principal dwelling;

``(C) the term `securitization vehicle' means a trust, corporation, partnership, limited liability entity, special purpose entity, or other structure that 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''

(D) the term ``servicer'' includes the entities listed in subsection (i)(2)(A) and (B) of RESPA (12 U.S.C. sections 2605(i)(2)(A) and (B)).

Effective Period--this section shall apply only with respect to qualified loan modifications or workout plans initiated during the 6 month period beginning on the date of enactment of this section.

(As printed in the Congressional Record for the Senate on Apr 3, 2008.)