12 U.S.C. § 5219: Foreclosure mitigation efforts

Summary

The Secretary must create and follow a plan to help homeowners when the government buys mortgages, mortgage-backed securities, or other property-backed assets, including apartment buildings. The plan must push loan servicers to use programs like the HOPE for Homeowners Program or other options to avoid foreclosures. The Secretary can use loan guarantees or credit help to make loan changes easier and to fix lead or asbestos problems. The Secretary does not have to apply executive pay limits or accept warrants or debt just because a loan is modified. The Secretary must work with other federal agencies that hold troubled assets and try to let tenants who pay rent stay in their homes and protect rental subsidies and needed operating funds for safe housing. The Secretary must also agree, when it makes sense for taxpayers, to reasonable loss-reduction requests such as extending terms, lowering rates, reducing principal, allowing more loans to be changed, or removing limits on modifications.

Title 12, §5219

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(a)Residential mortgage loan servicing standards

(1)In general

To the extent that the Secretary acquires mortgages, 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)Waiver of certain provisions in connection with loan modifications

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)Coordination

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)Consent to reasonable loan modification requests

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

Citations & Metadata