[Congressional Bills 111th Congress]
[From the U.S. Government Printing Office]
[S. 61 Introduced in Senate (IS)]
111th CONGRESS
1st Session
S. 61
To amend title 11 of the United States Code with respect to
modification of certain mortgages on principal residences, and for
other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 6, 2009
Mr. Durbin (for himself, Mrs. Boxer, Mrs. Feinstein, Mr. Harkin, Mr.
Schumer, and Mr. Whitehouse) introduced the following bill; which was
read twice and referred to the Committee on the Judiciary
_______________________________________________________________________
A BILL
To amend title 11 of the United States Code with respect to
modification of certain mortgages on principal residences, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Helping Families Save Their Homes in
Bankruptcy Act of 2009''.
SEC. 2. ELIGIBILITY FOR RELIEF.
Section 109 of title 11, United States Code, is amended--
(1) by adding at the end of subsection (e) the following:
``For purposes of this subsection, the computation of debts
shall not include the secured or unsecured portions of--
``(1) debts secured by the debtor's principal residence if
the current value of that residence is less than the secured
debt limit; or
``(2) debts secured or formerly secured by real property
that was the debtor's principal residence that was sold in
foreclosure or that the debtor surrendered to the creditor if
the current value of such real property is less than the
secured debt limit.''; and
(2) by adding at the end of subsection (h) the following:
``(5) The requirements of paragraph (1) shall not apply in a case
under chapter 13 with respect to a debtor who submits to the court a
certification that the debtor has received notice that the holder of a
claim secured by the debtor's principal residence may commence a
foreclosure on the debtor's principal residence.''.
SEC. 3. PROHIBITING CLAIMS ARISING FROM VIOLATIONS OF CONSUMER
PROTECTION LAWS.
Section 502(b) of title 11, United States Code, is amended--
(1) in paragraph (8) by striking ``or'' at the end,
(2) in paragraph (9) by striking the period at the end and
inserting ``; or'', and
(3) by adding at the end the following:
``(10) the claim is subject to any remedy for damages or
rescission due to failure to comply with any applicable
requirement under the Truth in Lending Act, or any other
provision of applicable State or Federal consumer protection
law that was in force when the noncompliance took place,
notwithstanding the prior entry of a foreclosure judgment.''.
SEC. 4. AUTHORITY TO MODIFY CERTAIN MORTGAGES.
Section 1322(b) of title 11, United States Code, is amended--
(1) by redesignating paragraph (11) as paragraph (12),
(2) in paragraph (10) by striking ``and'' at the end, and
(3) by inserting after paragraph (10) the following:
``(11) notwithstanding paragraph (2) and otherwise
applicable nonbankruptcy law, with respect to a claim for a
loan secured by a security interest in the debtor's principal
residence that is the subject of a notice that a foreclosure
may be commenced, modify the rights of the holder of such
claim--
``(A) by providing for payment of the amount of the
allowed secured claim as determined under section
506(a)(1);
``(B) if any applicable rate of interest is
adjustable under the terms of such security interest by
prohibiting, reducing, or delaying adjustments to such
rate of interest applicable on and after the date of
filing of the plan;
``(C) by modifying the terms and conditions of such
loan--
``(i) to extend the repayment period for a
period that is no longer than the longer of 40
years (reduced by the period for which such
loan has been outstanding) or the remaining
term of such loan, beginning on the date of the
order for relief under this chapter; and
``(ii) to provide for the payment of
interest accruing after the date of the order
for relief under this chapter at an annual
percentage rate calculated at a fixed annual
percentage rate, in an amount equal to the then
most recently published annual yield on
conventional mortgages published by the Board
of Governors of the Federal Reserve System, as
of the applicable time set forth in the rules
of the Board, plus a reasonable premium for
risk; and
``(D) by providing for payments of such modified
loan directly to the holder of the claim; and''.
SEC. 5. COMBATING EXCESSIVE FEES.
Section 1322(c) of title 11, the United States Code, is amended--
(1) in paragraph (1) by striking ``and'' at the end,
(2) in paragraph (2) by striking the period at the end and
inserting a semicolon, and
(3) by adding at the end the following:
``(3) the debtor, the debtor's property, and property of
the estate are not liable for a fee, cost, or charge that is
incurred while the case is pending and arises from a debt that
is secured by the debtor's principal residence except to the
extent that--
``(A) the holder of the claim for such debt files
with the court (annually or, in order to permit filing
consistent with clause (ii), at such more frequent
periodicity as the court determines necessary) notice
of such fee, cost, or charge before the earlier of--
``(i) 1 year after such fee, cost, or
charge is incurred; or
``(ii) 60 days before the closing of the
case; and
``(B) such fee, cost, or charge--
``(i) is lawful under applicable
nonbankruptcy law, reasonable, and provided for
in the applicable security agreement; and
``(ii) is secured by property the value of
which is greater than the amount of such claim,
including such fee, cost, or charge;
``(4) the failure of a party to give notice described in
paragraph (3) shall be deemed a waiver of any claim for fees,
costs, or charges described in paragraph (3) for all purposes,
and any attempt to collect such fees, costs, or charges shall
constitute a violation of section 524(a)(2) or, if the
violation occurs before the date of discharge, of section
362(a); and
``(5) a plan may provide for the waiver of any prepayment
penalty on a claim secured by the debtor's principal
residence.''.
SEC. 6. CONFIRMATION OF PLAN.
Section 1325(a) of title 11, the United States Code, is amended--
(1) in paragraph (8) by striking ``and'' at the end,
(2) in paragraph (9) by striking the period at the end and
inserting a semicolon, and
(3) by inserting after paragraph (9) the following:
``(10) notwithstanding subclause (I) of paragraph
(5)(B)(i), the plan provides that the holder of a claim whose
rights are modified pursuant to section 1322(b)(11) retain the
lien until the later of--
``(A) the payment of such holder's allowed secured
claim; or
``(B) discharge under section 1328; and
``(11) the plan modifies a claim in accordance with section
1322(b)(11), and the court finds that such modification is in
good faith.''.
SEC. 7. DISCHARGE.
Section 1328 of title 11, the United States Code, is amended--
(1) in subsection (a)--
(A) by inserting ``(other than payments to holders
of claims whose rights are modified under section
1322(b)(11)'' after ``paid'' the 1st place it appears,
and
(B) in paragraph (1) by inserting ``or, to the
extent of the unpaid portion of an allowed secured
claim, provided for in section 1322(b)(11)'' after
``1322(b)(5)'', and
(2) in subsection (c)(1) by inserting ``or, to the extent
of the unpaid portion of an allowed secured claim, provided for
in section 1322(b)(11)'' after ``1322(b)(5)''.
SEC. 8. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.
(a) Effective Date.--Except as provided in subsection (b), this Act
and the amendments made by this Act shall take effect on the date of
the enactment of this Act.
(b) Application of Amendments.--The amendments made by this Act
shall apply with respect to cases commenced under title 11 of the
United States Code before, on, or after the date of the enactment of
this Act.
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