“A bill to provide requirements for the bulk auction or group sale of certain non-performing loans, and for other purposes.”
No CRS summary available for this bill.
This section authorizes the Secretary of Housing and Urban Development to sell one or more non-performing single family residential mortgage loans insured under FHA Title II (i.e., Federal Housing Administration-insured mortgages that promote homeownership, particularly for lower-income and first-time buyers) only if (1) no other reasonable measures are available to restore the Mutual Mortgage Insurance Fund to minimum capital requirements under section 205(f)(4); (2) a priority system is established for Federal, state, local, or Tribal governments or nonprofits with capacity to buy, service, and resolve such loans while promoting affordable housing, fair housing, homeownership, counseling, or neighborhood stabilization; (3) applicable FHA loss mitigation under section 230 is exhausted; and (4) the servicer provides at least 90 days' certified and first-class mail notice to the borrower, owners of record, and the borrower's estate (with a copy to the Secretary) detailing the sale, available protections, loss mitigation status, and servicer obligations. Purchasers must provide loss mitigation at least as favorable as FHA guidelines (including no fees for modifications reducing payments to affordable levels and a fee-free deferral program mirroring FHA partial claims for those affording pre-hardship payments); publicly disclose post-sale options; report data per subsection (d)(1); maintain vacant properties (including paying taxes) until title transfer or bona fide sale; retain liens on vacant properties until sold or donated; prohibit contract-for-deed or similar sales unless to nonprofits; and, for foreclosed properties where home retention is impossible, restrict 75% to (i) sale at fair market value to owner-occupants; (ii) sale or donation to nonprofits or local governments committing to owner-occupant sale or affordable leasing; (iii) affordable leasing for 10 years (rents ≤30% of household income ≤100% area median income, accepting all legal income sources including Section 8 vouchers under the Housing Choice Voucher Program [42 U.S.C. 1437f], Social Security, child support, etc.); or (iv) demolition or donation to land banks (with cash for costs). This section further authorizes direct sales of such loans to municipalities, land banks, or nonprofits subject to equivalent requirements.
This section establishes requirements for Fannie Mae and Freddie Mac (i.e., the enterprises) to conduct bulk auctions or group sales of single-family non-performing residential loans, prohibiting such sales unless (1) the enterprise prioritizes Federal, State, local, or Tribal governments and qualified nonprofits for purchases promoting affordable housing, fair housing, homeownership, counseling, or neighborhood stabilization; (2) applicable loss mitigation is exhausted; (3) the enterprise or servicer provides 90 days' advance notice via certified and first-class mail detailing the sale process, loss mitigation status, and servicer obligations; (4) sale terms require purchasers to offer loss mitigation and deferral at least as favorable as enterprise guidelines (without fees), publicly disclose options, report data, retain liens on vacant properties until sold or donated, prohibit certain sales contracts except to nonprofits, and—for properties acquired via foreclosure where retention is impossible—allocate 75% to owner-occupants at fair market value, nonprofits or local governments committing to such sales or 10-year affordable leasing (≤100% area median income, rents ≤30% household income accepting all legal income sources including vouchers and benefits), or demolition/donation to land banks; and (5) the enterprise maintains vacant or abandoned properties until transfer to nonprofits or sale to third parties. The section further prohibits sales of such loans in forbearance or not more than 90 days removed from forbearance.