To reduce home foreclosures, compensate servicers who modify mortgages, and remove the legal constraints that inhibit modification, and for other purposes.

SA 159. Mr. MARTINEZ submitted an amendment intended to be proposed
to amendment SA 98 proposed by Mr. Inouye (for himself and Mr. Baucus)
to the bill H.R. 1, making supplemental appropriations for job
preservation and creation, infrastructure investment, energy efficiency
and science, assistance to the unemployed, and State and local fiscal
stabilization, for fiscal year ending September 30, 2009, and for other
purposes; which was ordered to lie on the table; as follows:

At the end of division B, add the following:

TITLE VI--FORECLOSURE MITIGATION

SEC. 6001. SHORT TITLE.

This title may be cited as the ``Keep Families in Their
Homes Act of 2009''.

SEC. 6002. DEFINITIONS.

For purposes of this title--
(1) the term ``securitized mortgages'' means residential
mortgages that have been pooled by a securitization vehicle;
(2) the term ``securitization vehicle'' means a trust,
corporation, partnership, limited liability entity, special
purpose entity, or other structure that--
(A) 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;
(B) holds all of the mortgage loans which are the basis for
any vehicle described in subparagraph (A); and
(C) has not issued securities that are guaranteed by the
Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation, or the Government National Mortgage
Association;
(3) the term ``servicer'' means a servicer of securitized
mortgages;
(4) the term ``eligible servicer'' means a servicer of
pooled and securitized residential mortgages, all of which
are eligible mortgages;
(5) the term ``eligible mortgage'' means a residential
mortgage, the principal amount of which did not exceed the
conforming loan size limit that was in existence at the time
of origination for a comparable dwelling, as established by
the Federal National Mortgage Association;
(6) the term ``Secretary'' means the Secretary of the
Treasury;
(7) the term ``effective term of the Act'' means the period
beginning on the effective date of this title and ending on
December 31, 2011;
(8) the term ``incentive fee'' means the monthly payment to
eligible servicers, as determined under section 6003;
(9) the term ``Office'' means the Office of Aggrieved
Investor Claims established under section 6004(a); and
(10) the term ``prepayment fee'' means the payment to
eligible servicers, as determined under section 6003(b).

SEC. 6003. PAYMENTS TO ELIGIBLE SERVICERS AUTHORIZED.

(a) Authority.--The Secretary is authorized during the
effective term of the Act, to make payments to eligible
servicers in an amount not to exceed an aggregate of
$10,000,000,000, subject to the terms and conditions
established under this title.
(b) Fees Paid to Eligible Servicers.--
(1) In general.--During the effective term of the Act,
eligible servicers may collect monthly fee payments,
consistent with the limitation in paragraph (2).
(2) Conditions.--For every mortgage that was--
(A) not prepaid during a month, an eligible servicer may
collect an incentive fee equal to 10 percent of mortgage
payments received during that month, not to exceed $60 per
loan; and
(B) prepaid during a month, an eligible servicer may
collect a one-time prepayment fee equal to 12 times the
amount of the incentive fee for the preceding month.
(c) Safe Harbor.--Notwithstanding any other provision of
law, and notwithstanding any investment contract between a
servicer and a securitization vehicle, a servicer--
(1) owes any duty to maximize the net present value of the
pooled mortgages in the securitization vehicle to all
investors and parties having a direct or indirect interest in
such vehicle, and not to any individual party or group of
parties; and
(2) shall be deemed to act in the best interests of all
such investors and parties if the servicer agrees to or
implements a modification, workout, or other loss mitigation
plan for a residential mortgage or a class of residential
mortgages that constitutes a part or all of the pooled
mortgages in such securitization vehicle, if--
(A) default on the payment of such mortgage has occurred or
is reasonably foreseeable;
(B) the property securing such mortgage is occupied by the
mortgagor of such mortgage; and
(C) the servicer reasonably and in good faith believes that
the anticipated recovery on the principal outstanding
obligation of the mortgage under the modification or workout
plan exceeds, on a net present value basis, the anticipated
recovery on the principal outstanding obligation of the
mortgage through foreclosure;
(3) shall not be obligated to repurchase loans from, or
otherwise make payments to, the securitization vehicle on
account of a modification, workout, or other loss mitigation
plan that satisfies the conditions of paragraph (2); and
(4) if it acts in a manner consistent with the duties set
forth in paragraphs (1) and (2), shall not be liable for
entering into a modification or workout plan to any person--
(A) based on ownership by that person of a residential
mortgage loan or any interest in a pool of residential
mortgage loans, or in securities that distribute payments out
of the principal, interest, and other payments in loans in
the pool;
(B) who is obligated to make payments determined in
reference to any loan or any interest referred to in
subparagraph (A); or
(C) that insures any loan or any interest referred to in
subparagraph (A) under any provision of law or regulation of
the United States or any State or political subdivision
thereof.
(d) Legal Costs.--If an unsuccessful suit is brought by a
person described in subsection (d)(4), that person shall bear
the actual legal costs of the servicer, including reasonable
attorney fees and expert witness fees, incurred in good
faith.
(e) Reporting Requirements.--
(1) In general.--Each servicer shall report regularly, not
less frequently than monthly, to the Secretary on the extent
and scope of the loss mitigation activities of the mortgage
owner.
(2) Content.--Each report required by this subsection shall
include--
(A) the number of residential mortgage loans receiving loss
mitigation that have become performing loans;
(B) the number of residential mortgage loans receiving loss
mitigation that have proceeded to foreclosure;
(C) the total number of foreclosures initiated during the
reporting period;
(D) data on loss mitigation activities, disaggregated to
reflect whether the loss mitigation was in the form of--
(i) a waiver of any late payment charge, penalty interest,
or any other fees or charges, or any combination thereof;
(ii) the establishment of a repayment plan under which the
homeowner resumes regularly scheduled payments and pays
additional amounts at scheduled intervals to cure the
delinquency;
(iii) forbearance under the loan that provides for a
temporary reduction in or cessation of monthly payments,
followed by a reamortization of the amounts due under the
loan, including arrearage, and a new schedule of repayment
amounts;
(iv) waiver, modification, or variation of any material
term of the loan, including short-term, long-term, or life-
of-loan modifications that change the interest rate, forgive
the payment of principal or interest, or extend the final
maturity date of the loan;
(v) short refinancing of the loan consisting of acceptance
of payment from or on behalf of the homeowner of an amount
less than the amount alleged to be due and owing under the
loan, including principal, interest, and fees, in full
satisfaction of the obligation under such loan and as part of
a refinance transaction in which the property is intended to
remain the principal residence of the homeowner;

[[Page S1457]]

(vi) acquisition of the property by the owner or servicer
by deed in lieu of foreclosure;
(vii) short sale of the principal residence that is subject
to the lien securing the loan;
(viii) assumption of the obligation of the homeowner under
the loan by a third party;
(ix) cancellation or postponement of a foreclosure sale to
allow the homeowner additional time to sell the property; or
(x) any other loss mitigation activity not covered; and
(E) such other information as the Secretary determines to
be relevant.
(3) Public availability of reports.--After removing
information that would compromise the privacy interests of
mortgagors, the Secretary shall make public the reports
required by this subsection.

SEC. 6004. COMPENSATION FOR AGGRIEVED INVESTORS.

(a) In General.--
(1) Compensation.--Each injured person shall be entitled to
receive from the United States--
(A) compensation for injury suffered by the injured person
as a result of loan modifications made pursuant to this
title; and
(B) damages described in subsection (d)(4), as determined
by the Secretary of the Treasury.
(2) Office of aggrieved investor claims.--
(A) In general.--There is established within the Department
of the Treasury an Office of Aggrieved Investor Claims.
(B) Purpose.--The Office shall receive, process, and pay
claims in accordance with this section.
(C) Funding.--The Office--
(i) shall be funded from funds made available to the
Secretary under this section;
(ii) may reimburse other Federal agencies for claims
processing support and assistance;
(iii) may appoint and fix the compensation of such
temporary personnel as may be necessary, without regard to
the provisions of title 5, United States Code, governing
appointments in competitive service; and
(iv) upon the request of the Secretary, the head of any
Federal department or agency may detail, on a reimbursable
basis, any of the personnel of that department or agency to
the Department of Treasury to assist it in carrying out its
duties under this section.
(3) Option to appoint independent claims manager.--The
Secretary may appoint an Independent Claims Manager--
(A) to head the Office; and
(B) to assume the duties of the Secretary under this
section.
(b) Submission of Claims.--Not later than 2 years after the
date on which regulations are first promulgated under
subsection (f), an injured person may submit to the Secretary
a written claim for one or more injuries suffered by the
injured person in accordance with such requirements as the
Secretary determines to be appropriate.
(c) Investigation of Claims.--
(1) In general.--The Secretary shall, on behalf of the
United States, investigate, consider, ascertain, adjust,
determine, grant, deny, or settle any claim for money damages
asserted under subsection (b).
(2) Extent of damages.--Any payment under this section--
(A) shall be limited to actual compensatory damages
measured by injuries suffered; and
(B) shall not include--
(i) interest before settlement or payment of a claim; or
(ii) punitive damages.
(d) Payment of Claims.--
(1) Determination and payment of amount.--
(A) In general.--Not later than 180 days after the date on
which a claim is submitted under this section, the Secretary
shall determine and fix the amount, if any, to be paid for
the claim.
(B) Parameters of determination.--In determining and
settling a claim under this section, the Secretary shall
determine only--
(i) whether the claimant is an injured person;
(ii) whether the injury that is the subject of the claim
resulted from a loan modification made pursuant to this
title;
(iii) the amount, if any, to be allowed and paid under this
section; and
(iv) the person or persons entitled to receive the amount.
(2) Partial payment.--
(A) In general.--At the request of a claimant, the
Secretary may make one or more advance or partial payments
before the final settlement of a claim, including final
settlement on any portion or aspect of a claim that is
determined to be severable.
(B) Judicial decision.--If a claimant receives a partial
payment on a claim under this section, but further payment on
the claim is subsequently denied by the Secretary, the
claimant may--
(i) seek judicial review under subsection (i); and
(ii) keep any partial payment that the claimant received,
unless the Secretary determines that the claimant--

(I) was not eligible to receive the compensation; or
(II) fraudulently procured the compensation.

(3) Allowable damages for financial loss.--A claim that is
paid for injury under this section may include damages
resulting from a loan modification pursuant to this title for
the following types of otherwise uncompensated financial
loss:
(A) Lost personal income.
(B) Any other loss that the Secretary determines to be
appropriate for inclusion as financial loss.
(e) Acceptance of Award.--The acceptance by a claimant of
any payment under this section, except an advance or partial
payment made under subsection (d)(2), shall--
(1) be final and conclusive on the claimant with respect to
all claims arising out of or relating to the same subject
matter;
(2) constitute a complete release of all claims against the
United States (including any agency or employee of the United
States) under chapter 171 of title 28, United States Code
(commonly known as the ``Federal Tort Claims Act''), or any
other Federal or State law, arising out of or relating to the
same subject matter;
(3) constitute a complete release of all claims against the
eligible servicer of the securitization in which the injured
person was an investor under any Federal or State law,
arising out of or relating to the same subject matter; and
(4) shall include a certification by the claimant, made
under penalty of perjury and subject to the provisions of
section 1001 of title 18, United States Code, that such claim
is true and correct.
(f) Regulations.--Notwithstanding any other provision of
law, not later than 45 days after the date of enactment of
this Act, the Secretary shall promulgate and publish in the
Federal Register interim final regulations for the processing
and payment of claims under this section.
(g) Consultation.--In administering this section, the
Secretary shall consult with other Federal agencies, as
determined to be necessary by the Secretary, to ensure the
efficient administration of the claims process.
(h) Election of Remedy.--
(1) In general.--An injured person may elect to seek
compensation from the United States for one or more injuries
resulting from a loan modification made pursuant to this
title by--
(A) submitting a claim under this section;
(B) filing a claim or bringing a civil action under chapter
171 of title 28, United States Code; or
(C) bringing an authorized civil action under any other
provision of law.
(2) Effect of election.--An election by an injured person
to seek compensation in any manner described in paragraph (1)
shall be final and conclusive on the claimant with respect to
all injuries resulting from a loan modification made pursuant
to this title that are suffered by the claimant.
(3) Arbitration.--
(A) In general.--Not later than 45 days after the date of
the enactment of this Act, the Secretary shall establish by
regulation procedures under which a dispute regarding a claim
submitted under this section may be settled by arbitration.
(B) Arbitration as remedy.--On establishment of arbitration
procedures under subparagraph (A), an injured person that
submits a disputed claim under this section may elect to
settle the claim through arbitration.
(C) Binding effect.--An election by an injured person to
settle a claim through arbitration under this paragraph
shall--
(i) be binding; and
(ii) preclude any exercise by the injured person of the
right to judicial review of a claim described in subsection
(i).
(i) Judicial Review.--
(1) In general.--Any claimant aggrieved by a final decision
of the Secretary under this section may, not later than 60
days after the date on which the decision is issued, bring a
civil action in the United States District Court for the
District of Columbia, to modify or set aside the decision, in
whole or in part.
(2) Record.--The court shall hear a civil action under
paragraph (1) on the record made before the Secretary.
(3) Standard.--The decision of the Secretary incorporating
the findings of the Secretary shall be upheld if the decision
is supported by substantial evidence on the record considered
as a whole.
(j) Attorney's and Agent's Fees.--
(1) In general.--No attorney or agent, acting alone or in
combination with any other attorney or agent, shall charge,
demand, receive, or collect, for services rendered in
connection with a claim submitted under this section, fees in
excess of 10 percent of the amount of any payment on the
claim.
(2) Violation.--An attorney or agent who violates paragraph
(1) shall be fined not more than $10,000.
(k) Applicability of Debt Collection Requirements.--Section
3716 of title 31, United States Code, shall not apply to any
payment under this section.
(l) Report.--Not later than 1 year after the date of
promulgation of regulations under subsection (f), and
annually thereafter, the Secretary shall submit to Congress a
report that describes the claims submitted under this section
during the year preceding the date of submission of the
report, including, for each claim--
(1) the amount claimed;
(2) a brief description of the nature of the claim; and
(3) the status or disposition of the claim, including the
amount of any payment under this section.
(m) GAO Audit.--The Comptroller General of the United
States shall conduct an annual audit on the payment of all
claims made under this section and shall report to the

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Congress on the results of this audit beginning not later
than the expiration of the 1-year period beginning on the
date of the enactment of this Act.
(n) Authorization of Appropriations.--There are authorized
to be appropriated for the payment of claims in accordance
with this section up to $1,700,000,000, to remain available
until expended.

SEC. 6005. AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated to the Secretary,
such sums as may be necessary to carry out this title.

SEC. 6006. SUNSET OF AUTHORITY.

The authority of the Secretary to provide assistance under
this title shall terminate on December 31, 2011.
______