§1639a — Title 15 Commerce and Trade | U.S. Code

Summary

When a mortgage servicer agrees to use a qualified loss mitigation plan for loans made before May 20, 2009, the servicer’s duty to “maximize net present value” must be seen as a duty to all investors together, not to any one investor or group. A servicer will be treated as meeting that duty if, before December 31, 2012, it puts in place a qualified plan that follows Treasury guidelines and only when: a default has happened, is about to happen, or is reasonably foreseeable; the borrower lives in the home as their main residence; and the servicer reasonably finds the plan will likely recover more money than a foreclosure would. If the servicer follows these rules, the servicer and people who help (like trustees, issuers, or loan originators) cannot be sued for money damages or forced into an injunction or stay just because they used the qualified plan. The Treasury’s guidelines count as normal industry practice. Servicers must report regularly to the Treasury about their modification work. These protections do not cover actual fraud or violations of federal or state law, including predatory lending laws. Definitions: qualified loss mitigation plan = things like loan modifications, loan sales, trial modifications, pre-foreclosure sales, deeds in lieu, and Hope for Homeowners refinancing; servicer = the person who services loans for others; securitization vehicle = a trust or special entity that holds mortgages for securities.

Title 15, §1639a

Commerce and Trade — Source: USLM XML via OLRC

(a)Notwithstanding any other provision of law, whenever a servicer of residential mortgages agrees to enter into a qualified loss mitigation plan with respect to 1 or more residential mortgages originated before May 20, 2009, including mortgages held in a securitization or other investment vehicle—

(1)to the extent that the servicer owes a duty to investors or other parties to maximize the net present value of such mortgages, the duty shall be construed to apply to all such investors and parties, and not to any individual party or group of parties; and

(2)the servicer shall be deemed to have satisfied the duty set forth in paragraph (1) if, before December 31, 2012, the servicer implements a qualified loss mitigation plan that meets the following criteria:

(A)Default on the payment of such mortgage has occurred, is imminent, or is reasonably foreseeable, as such terms are defined by guidelines issued by the Secretary of the Treasury or his designee under the Emergency Economic Stabilization Act of 2008 [12 U.S.C. 5201 et seq.].

(B)The mortgagor occupies the property securing the mortgage as his or her principal residence.

(C)The servicer reasonably determined, consistent with the guidelines issued by the Secretary of the Treasury or his designee, that the application of such qualified loss mitigation plan to a mortgage or class of mortgages will likely provide an anticipated recovery on the outstanding principal mortgage debt that will exceed the anticipated recovery through foreclosures.

(b)A servicer that is deemed to be acting in the best interests of all investors or other parties under this section shall not be liable to any party who is owed a duty under subsection (a)(1), and shall not be subject to any injunction, stay, or other equitable relief to such party, based solely upon the implementation by the servicer of a qualified loss mitigation plan.

(c)The qualified loss mitigation plan guidelines issued by the Secretary of the Treasury under the Emergency Economic Stabilization Act of 2008 [12 U.S.C. 5201 et seq.] shall constitute standard industry practice for purposes of all Federal and State laws.

(d)Any person, including a trustee, issuer, and loan originator, shall not be liable for monetary damages or be subject to an injunction, stay, or other equitable relief, based solely upon the cooperation of such person with a servicer when such cooperation is necessary for the servicer to implement a qualified loss mitigation plan that meets the requirements of subsection (a).

(e)Each servicer that engages in qualified loss mitigation plans under this section shall regularly report to the Secretary of the Treasury the extent, scope, and results of the servicer’s modification activities. The Secretary of the Treasury shall prescribe regulations or guidance specifying the form, content, and timing of such reports.

(f)As used in this section—

(1)the term “qualified loss mitigation plan” means—

(A)a residential loan modification, workout, or other loss mitigation plan, including to the extent that the Secretary of the Treasury determines appropriate, a loan sale, real property disposition, trial modification, pre-foreclosure sale, and deed in lieu of foreclosure, that is described or authorized in guidelines issued by the Secretary of the Treasury or his designee under the Emergency Economic Stabilization Act of 2008 [12 U.S.C. 5201 et seq.]; and

(B)a refinancing of a mortgage under the Hope for Homeowners program;

(2)the term “servicer” means the person responsible for the servicing for others of residential mortgage loans (including of a pool of residential mortgage loans); and

(3)the term “securitization vehicle” means a trust, special purpose entity, or other legal structure that is used to facilitate the issuing of securities, participation certificates, or similar instruments backed by or referring to a pool of assets that includes residential mortgages (or instruments that are related to residential mortgages such as credit-linked notes).

(g)No provision of subsection (b) or (d) shall be construed as affecting the liability of any servicer or person as described in subsection (d) for actual fraud in the origination or servicing of a loan or in the implementation of a qualified loss mitigation plan, or for the violation of a State or Federal law, including laws regulating the origination of mortgage loans, commonly referred to as predatory lending laws.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Emergency Economic Stabilization Act of 2008, referred to in subsecs. (a)(2)(A), (c), (f)(1)(A), is div. A of Pub. L. 110–343, Oct. 3, 2008, 122 Stat. 3765, which is classified principally to chapter 52 (§ 5201 et seq.) of Title 12, Banks and Banking. For complete classification of this Act to the Code, see

Short Title

note set out under section 5201 of Title 12 and Tables.

Amendments

2009—Pub. L. 111–22 amended section generally. Prior to amendment, section related to fiduciary duty of servicers of pooled residential mortgages without providing for date limitation for implementing modifications or workout plans.

Statutory Notes and Related Subsidiaries

Findings Pub. L. 111–22, div. A, title II, § 201(a), May 20, 2009, 123 Stat. 1638, provided that: “Congress finds the following: “(1) Increasing numbers of mortgage foreclosures are not only depriving many Americans of their homes, but are also destabilizing property values and negatively affecting State and local economies as well as the national economy. “(2) In order to reduce the number of foreclosures and to stabilize property values, local economies, and the national economy, servicers must be given—“(A) authorization to—“(i) modify mortgage loans and engage in other loss mitigation activities consistent with applicable guidelines issued by the Secretary of the Treasury or his designee under the Emergency Economic Stabilization Act of 2008 [12 U.S.C. 5201 et seq.]; and “(ii) refinance mortgage loans under the Hope for Homeowners program; and “(B) a safe harbor to enable such servicers to exercise these authorities.”

§1639a Duty of Servicers of Residential Mortgages