§5219 — Title 12 Banks and Banking | U.S. Code

Summary

When the Secretary buys home loans, mortgage-backed securities, or other assets tied to houses or apartment buildings, the Secretary must run a plan that helps homeowners as much as possible. The plan must push loan servicers, when it makes financial sense for taxpayers (weighing net present value), to use the HOPE for Homeowners Program or other tools to avoid foreclosures. The Secretary may also use loan guarantees and other credit tools to make loan changes easier and to pay to fix lead and asbestos problems. The Secretary does not have to apply the executive pay limits in section 5221 or take warrants or debt under section 5223 just because a loan is modified. The Secretary must work with the Corporation, the Board and Federal Reserve banks, the Federal Housing Finance Agency, HUD, and other federal holders of troubled assets to find chances to buy asset classes that improve loan modification and restructuring. Where allowed, tenants who pay rent can stay under their leases. For rental properties, plans must protect federal, state, and local rental subsidies and make sure modifications leave enough operating money to keep buildings decent and safe. The Secretary must also, when asked under existing investment contracts and when it makes sense for taxpayers, agree to reasonable loss-mitigation changes such as extending terms, lowering rates, writing down principal, allowing more loans in a trust to be modified, or removing other limits on modifications.

Title 12, §5219

Banks and Banking — Source: USLM XML via OLRC

(a)(1)To the extent that the Secretary acquires mortgages, mortgage backed 11 So in original. Probably should be “mortgage-backed”. securities, and other assets secured by residential real estate, including multifamily housing, the Secretary shall implement a plan that seeks to maximize assistance for homeowners and use the authority of the Secretary to encourage the servicers of the underlying mortgages, considering net present value to the taxpayer, to take advantage of the HOPE for Homeowners Program under section 1715z–23 of this title or other available programs to minimize foreclosures. In addition, the Secretary may use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures and to remediate lead and asbestos hazards in residential properties.

(2)The Secretary shall not be required to apply executive compensation restrictions under section 5221 of this title, or to receive warrants or debt instruments under section 5223 of this title, solely in connection with any loan modification under this section.

(b)The Secretary shall coordinate with the Corporation, the Board (with respect to any mortgage or mortgage-backed securities or pool of securities held, owned, or controlled by or on behalf of a Federal reserve bank, as provided in section 5220(a)(1)(C) of this title), the Federal Housing Finance Agency, the Secretary of Housing and Urban Development, and other Federal Government entities that hold troubled assets to attempt to identify opportunities for the acquisition of classes of troubled assets that will improve the ability of the Secretary to improve the loan modification and restructuring process and, where permissible, to permit bona fide tenants who are current on their rent to remain in their homes under the terms of the lease. In the case of a mortgage on a residential rental property, the plan required under this section shall include protecting Federal, State, and local rental subsidies and protections, and ensuring any modification takes into account the need for operating funds to maintain decent and safe conditions at the property.

(c)Upon any request arising under existing investment contracts, the Secretary shall consent, where appropriate, and considering net present value to the taxpayer, to reasonable requests for loss mitigation measures, including term extensions, rate reductions, principal write downs, increases in the proportion of loans within a trust or other structure allowed to be modified, or removal of other limitation on modifications.

Editorial Notes

Amendments

2018—Subsec. (a)(1). Pub. L. 115–174 inserted before period at end “and to remediate lead and asbestos hazards in residential properties”. 2009—Subsec. (a). Pub. L. 111–5 designated existing provisions as par. (1), inserted par. (1) heading, and added par. (2).

§5219 Foreclosure Mitigation Efforts

Summary

Title 12, §5219

Notes & Related Subsidiaries

Editorial Notes

Amendments

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