To limit wasteful spending, to fund a systematic program of foreclosure prevention, to be administered by the Federal Deposit Insurance Corporation, and for other purposes.

SA 501. Mr. GRAHAM (for himself and Mr. Conrad) 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:

On page 6, strike lines 1 through 4.
On page 37, strike lines 1 through 5.
On page 37, line 10, strike ``$9,000,000,000'' and insert
``$8,800,000,000''
On page 37, line 13, strike ``not'' and all that follows
through ``libraries:'' on line 16.
On page 39, strike line 3 and all that follows through page
40, line 2.
On page 42, strike lines 10 through 14.
On page 44, line 18, strike ``$300,000,000'' and insert
``$275,000,000''.
On page 44, line 25, after the semicolon insert ``and''
On page 45, line 2, strike ``; and'' and insert a period.
On page 45, strike lines 3 through 5.
On page 57, line 10, strike ``$1,169,291,000'' and insert
``$1,069,291,000''.
On page 57, line 14, strike ``$571,843,000'' and insert
``$531,843,000''.
On page 57, line 18, strike ``$112,167,000'' and insert
``$92,167,000''.
On page 57, line 22, strike ``$927,113,000'' and insert
``$887,113,000''.
On page 92, strike lines 1 through 20.
On page 93, line 7, strike ``$9,048,000,000'' and insert
``$8,048,000,000''.
On page 93, line 12, strike ``$6,000,000,000'' and insert
``$5,000,000,000''.
On page 93, line 23, strike ``$7,000,000,000'' and insert
``$6,000,000,000''.
On page 95, strike lines 1 through 8.
On page 123, line 9, strike ``$3,250,000,000'' and insert
``$2,050,000,000''.
On page 123, strike line 18 and all that follows through
page 124, line 9.
On page 124, line 10, strike ``(3)'' and insert ``(2)''.
On page 124, line 13, strike ``(4)'' and insert ``(3)''.
On page 124, line 15, strike ``(5)'' and insert ``(4)''.
On page 125, line 1, strike ``(6)'' and insert ``(5)''.
On page 127, line 23, strike ``$1,088,000,000'' and insert
``$1,000,000,000''.
On page 127, line 24, strike ``of which'' and all that
follows through ``and'' on page 128, line 3.
On page 128, strike lines 8 through 22.
On page 130, strike lines 4 through 10.
On page 213, line 22, strike ``$64,961,000'' and insert
``$59,476,000''.
On page 213, line 25, strike ``; and'' and all that follows
through ``initiatives'' on lines 25 and 26.
On page 137, line 17, strike ``$5,800,000,000'' and insert
``$5,325,000,000''.
On page 139, line 22, after ``funds:'' insert ``Provided
further, That none of the amounts available under this
paragraph may be used for the screening or prevention of any
sexually transmitted disease or for any smoking cessation
activities.''
On page 391, line 5, strike ``$79,000,000,000'' and insert
``$62,800,000,000''.
At the end of division A, add the following:

TITLE XVII--FORECLOSURE PREVENTION MORTGAGE MODIFICATIONS

SEC. 1701. DEFINITIONS.

In this title--

[[Page S1757]]

(1) the term ``Corporation'' means the Federal Deposit
Insurance Corporation;
(2) the term ``Chairperson'' means the Chairperson of the
Board of Directors of the Corporation;
(3) the term ``Secretaries'' means the Secretary of the
Treasury and the Secretary of Housing and Urban Development,
jointly;
(4) the term ``program'' means the foreclosure prevention
and mortgage modification program established under this
section; and
(5) the term ``eligible mortgage'' means an extension of
credit that is secured by real property that is the primary
residence of the borrower.

SEC. 1702. LOAN MODIFICATION PROGRAM.

(a) Establishment.--The Chairperson shall establish a
systematic foreclosure prevention and mortgage modification
program, in consultation with the Secretaries, that--
(1) provides lenders and loan servicers with compensation
to cover administrative costs for each eligible mortgage
modified according to the required standards; and
(2) provides loss sharing or guarantees for certain losses
incurred if a modified eligible mortgage should subsequently
redefault.
(b) Program Components.--The program established under
subsection (a) shall include the following components:
(1) Exclusion for early payment default.--To promote
sustainable mortgages, loss sharing or guarantees under the
program shall be available only after the borrower has made a
specified minimum number of payments on the modified
mortgage, as determined by the Chairperson.
(2) Standard net present value test.--In order to promote
consistency and simplicity in implementation and auditing
under the program, the Chairperson shall prescribe and
require lenders and loan servicers to apply a standardized
net present value analysis for participating lenders and loan
servicers that compares the expected net present value of
modifying past due mortgage loans with the net present value
of foreclosing on such mortgage loans. The Chairperson shall
use standard industry assumptions to ensure that a consistent
standard for affordability is provided, based on a ratio of
the borrower's mortgage-related expenses to gross monthly
income specified by the Chairperson.
(3) Systematic loan review by participating lenders and
servicers.--
(A) Requirement.--Any lender or loan servicer that
participates in the program shall be required--
(i) to undertake a systematic review of all of the eligible
mortgage loans under its management;
(ii) to subject each such eligible mortgage loan to the
standard net present value test prescribed by the Chairperson
to determine whether it is suitable for modification under
the program; and
(iii) to offer modifications for all eligible mortgages
that meet such test.
(B) Disqualification.--Any lender or loan servicer that
fails to undertake a systematic review and to carry out
modifications where they are justified, as required by
subparagraph (A), shall be disqualified from further
participation in the program, pending proof of compliance
with subparagraph (A).
(4) Modifications.--Modifications to eligible mortgages
under the program may include--
(A) reduction in interest rates and fees;
(B) term or amortization extensions;
(C) forbearance or forgiveness of principal; and
(D) other similar modifications, as determined appropriate
by the Chairperson.
(5) Loss share calculation.--In order to ensure the
administrative efficiency and effective operation of the
program and to provide adequate incentive to lenders and loan
servicers to modify eligible mortgages and avoid unnecessary
foreclosures, the Chairperson shall define appropriate
standardized measures for loss sharing or guarantees.
(6) De minimis test.--The Chairperson shall implement a de
minimis test to exclude from loss sharing under the program
any modification that does not lower the monthly loan payment
to the borrower by at least 7 to 15 percent, at the
determination of the Chairperson.
(7) Time limit on loss sharing payment.--At the
determination of the Chairperson, a loss sharing guarantee
under the program shall terminate between 5 and 15 years
after the date on which the mortgage modification is
consummated, as determined by the Chairperson.

SEC. 1703. ALTERNATIVE COMPONENTS.

(a) In General.--The Chairperson may, with the approval of
the Secretaries, and after making the certifications to
Congress required by subsection (b), implement foreclosure
prevention and mitigation actions other than those authorized
under section 1702.
(b) Certification to Congress.--The Chairperson shall
certify to Congress that the Chairperson believes the
alternative foreclosure mitigation actions would provide
equivalent or greater impact or have a more cost-effective
impact on foreclosure mitigation than those authorized under
section 1702. Such certification shall contain quantitative
projections of the benefit of pursuing the alternative
actions in place of or in addition to the actions authorized
under section 1702.

SEC. 1704. TIMELY IMPLEMENTATION.

The Chairperson shall begin implementation of, and shall
allow lenders and loan servicers to begin participation in,
the mortgage modification program under this title not later
than 1 month after the date of enactment of this Act.

SEC. 1705. SAFE HARBOR FOR LOAN SERVICERS.

(a) Loan Modifications and Workout Plans.--Notwithstanding
any other provision of law, and notwithstanding any
investment contract between a loan servicer and a
securitization vehicle or investor, a loan servicer that acts
consistent with the duty set forth in section 129A(a) of
Truth in Lending Act (15 U.S.C. 1639a) shall not be liable
for entering into a loan modification or workout plan under
the program established under this title, or with respect to
any mortgage that meets all of the criteria set forth in
subsection (b)(2), to--
(1) any person, based on that person's ownership 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
on loans in the pool;
(2) any person who is obligated to make payments determined
in reference to any loan or any interest referred to in
paragraph (1); or
(3) any person that insures any loan or any interest
referred to in paragraph (1) under any provision of law or
regulation of the United States or of any State or political
subdivision of any State.
(b) Ability to Modify Mortgages.--
(1) In general.--Notwithstanding any other provision of
law, and notwithstanding any investment contract between a
loan servicer and a securitization vehicle or investor, with
respect to any mortgage loan that meets all of the criteria
set forth in paragraph (2), or which is modified in
accordance with the loan modification program established
under this title, a loan servicer--
(A) shall not be limited in the ability to modify
mortgages, the number of mortgages that can be modified, the
frequency of loan modifications, or the range of permissible
modifications;
(B) 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 for a residential mortgage or a class of residential
mortgages that constitute a part or all of the mortgages in
the securitization vehicle; and
(C) shall not lose the safe harbor protection provided
under subsection (a) due to actions taken in accordance with
subparagraphs (A) and (B).
(2) Criteria.--A mortgage loan described in this paragraph
is a mortgage loan with respect to which--
(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; and
(C) the loan servicer reasonably and in good faith believes
that the anticipated recovery on the principal outstanding
obligation of the mortgage under the particular modification
or workout plan or other loss mitigation action will exceed,
on a net present value basis, the anticipated recovery on the
principal outstanding obligation of the mortgage to be
realized through foreclosure.
(c) Applicability.--This section shall apply only with
respect to modifications, workouts, and other loss mitigation
plans initiated before July 1, 2010.
(d) Reporting.--Each loan servicer that engages in loan
modifications or workout plans subject to the safe harbor in
this section shall report to the Chairperson on a regular
basis regarding the extent, scope, and results of the loan
servicer's modification activities, subject to the rules of
the Chairperson regarding the form, content, and timing of
such reports.
(e) Definition of Securitization Vehicles.--For purposes of
this section, the term `securitization vehicle' means a
trust, corporation, partnership, limited liability entity,
special purpose entity, or other structure that--
(1) 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
(2) holds such mortgages.

SEC. 1706. FUNDING.

There is appropriated to the Secretary of the Treasury to
cover the costs incurred by the Corporation in carrying out
the mortgage modification program established under this
title, $22,850,000,000. Funds that are unused by July 1,
2010, shall be returned to the General Fund of the Treasury
of the United States, unless otherwise directed by Congress.

SEC. 1707. FDIC COSTS AND AUTHORITY.

(a) Transfer From Secretary.--The Chairperson shall, from
time to time, request payment of the anticipated costs of
carrying out the program, including any administrative costs,
and the Secretary of the Treasury shall immediately pay the
amounts requested to the Corporation from the funds made
available under section 1706.
(b) Corporation Authority.--In carrying out its
responsibilities under this title, the Corporation may
exercise its authority under section 9 of the Federal Deposit
Insurance Act.

SEC. 1708. REPORT.

Before the end of the 2-month period beginning on the date
of enactment of this Act and every 3 months thereafter, the
Chairperson shall submit a report to the Congress

[[Page S1758]]

detailing the implementation results and costs of the
mortgage modification program, and containing such
recommendations for legislative or administrative action as
the Chairperson may determine to be appropriate.
______