Armed Forces Housing Security Act - Increases the maximum loan guaranty amount for certain veterans' housing loans guaranteed through the Department of Veterans Affairs (VA).
Directs the Secretary of Veterans Affairs to review and streamline the process for guaranteeing veterans' home loans for the purchase of condominiums.
Repeals the veterans' home loan fee.
Authorizes the Secretary to provide loans to veterans to refinance loans of up to 100% (currently 90%) of the value of the dwelling or farm residence securing the loan. Allows the VA to guarantee refinanced loans not previously guaranteed by the VA.
Amends the Servicemembers Civil Relief Act to extend from 90 days to one year after completion of military service the grace period against the sale, foreclosure, or seizure of a defaulted mortgage. Prohibits a member of the Armed Forces from waiving such protection. Specifically applies such protection to members (regular and reserve) serving on active duty as part of Operations Iraqi Freedom or Enduring Freedom (covered member), and their dependents.
Provides protections against loan owners or insurers for loan servicers who implement qualified loan modifications or workout plans for covered members and their dependents.
Directs the Secretary of Defense to provide financial services counseling relating to a mortgage and mortgage foreclosure to a veteran, covered member, and their dependents.
[Congressional Bills 110th Congress]
[From the U.S. Government Printing Office]
[S. 2992 Introduced in Senate (IS)]
110th CONGRESS
2d Session
S. 2992
To amend title 38, United States Code, to enhance housing loan
authorities for veterans and to otherwise assist veterans and members
of the Armed Forces in avoiding the foreclosure of their homes, and for
other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 7, 2008
Mr. Reid (for Mrs. Clinton (for herself and Mr. Schumer)) introduced
the following bill; which was read twice and referred to the Committee
on Veterans' Affairs
_______________________________________________________________________
A BILL
To amend title 38, United States Code, to enhance housing loan
authorities for veterans and to otherwise assist veterans and members
of the Armed Forces in avoiding the foreclosure of their homes, 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 ``Armed Forces Housing Security Act''.
SEC. 2. INCREASE IN MAXIMUM LOAN GUARANTY AMOUNT FOR CERTAIN HOUSING
LOANS GUARANTEED BY THE SECRETARY OF VETERANS AFFAIRS.
(a) Increase.--
(1) In general.--Paragraph (1)(C) of section 3703(a) of
title 38, United States Code, is amended by striking ``25
percent of the Freddie Mac conforming loan limit'' and all that
follows and inserting ``25 percent of the higher of--
``(i) the limitation determined under section 305(a)(2) of
the Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1454(a)(2)) for the calendar year in which the loan is
originated for a single-family residence; or
``(ii) 125 percent of the area median price for a single-
family residence, but in no case to exceed 175 percent of the
limitation determined under such section 305(a)(2) for the
calendar year in which the loan is originated for a single-
family residence.''.
(2) Applicability.--The amendment made by paragraph (1)
shall apply with respect to loans originated on or after the
date of the enactment of this Act.
(b) Annual Increase in Home Loan Guaranty Amounts.--Such section is
further amended by adding at the end the following new paragraph:
``(3) With respect to any fiscal year, the Secretary shall provide
a percentage increase in the amounts guaranteed under paragraph (1)
equal to the percentage by which--
``(A) the Consumer Price Index (all items, United States
city average) for the 12-month period ending on the June 30
preceding the beginning of the fiscal year for which the
increase is made, exceeds
``(B) such Consumer Price Index for the 12-month period
preceding the 12-month period described in subparagraph (A).''.
SEC. 3. IMPROVEMENT OF GUARANTEE PROCESS FOR PURCHASE OF CONDOMINIUMS.
The Secretary of Veterans Affairs shall review and streamline the
process of guaranteeing home loans under chapter 37 of title 38, United
States Code, for the purchase of a condominium.
SEC. 4. REPEAL OF LOAN FUNDING FEES FOR VETERANS HOUSING LOANS.
(a) Repeal of Loan Funding Fees Requirement for Housing Loans.--
(1) In general.--Section 3729 of such title is repealed.
(2) Conforming amendments.--
(A) Section 2041(b)(2) of such title is amended--
(i) in subparagraph (A), by adding ``and''
at the end;
(ii) in subparagraph (B), by striking ``;
and'' and inserting a period; and
(iii) by striking subparagraph (C).
(B)(i) Section 3703 of such title is amended--
(I) by striking subsection (e); and
(II) by redesignating subsection (f) as
subsection (e).
(ii) Section 3732(a)(1) of such title is amended by
striking ``Except as provided in section 3703(e) of
this title, if'' and inserting ``If''.
(C) Section 3722(c) of such title is amended by
striking ``section 3729 of this title or any other
provision of law or'' and inserting ``any provision of
law or any''.
(D) Section 3734(b)(2) of such title is amended--
(i) by striking subparagraph (A); and
(ii) by redesignating subparagraphs (B),
(C), (D), and (E) as subparagraphs (A), (B),
(C), and (D), respectively.
(3) Clerical amendment.--The table of sections at the
beginning of chapter 37 of such title is amended by striking
the item relating to section 3729.
(b) Authorization of Appropriations for Veterans Housing Benefit
Program Fund.--There are authorized to be appropriated for the Veterans
Housing Benefit Program Fund under section 3722 of title 38, United
States Code, such sums as may be necessary to carry out the amendments
made by this section.
SEC. 5. LOAN REFINANCING FOR VETERANS IN DANGER OF MORTGAGE DEFAULT OR
FORECLOSURE.
(a) Decrease in Equity Requirement for Certain Loans.--Subsection
(b)(8) of section 3710 of title 38, United States Code, is amended by
striking ``90 percent'' and inserting ``100 percent''.
(b) Authority for DVA Guarantee of Refinanced Loans Not Previously
Guaranteed by DVA.--Subsection (a)(8) of such section is amended by
inserting ``, whether or not'' after ``an existing loan''.
SEC. 6. ENHANCEMENT OF PROTECTIONS FOR MEMBERS OF THE ARMED FORCES AND
THEIR DEPENDENTS AGAINST SALE, FORECLOSURE, SEIZURE, OR
SALE OF MORTGAGED PROPERTY.
(a) Extension of Period After Military Service Covered by General
Protections.--Section 303(c) of the Servicemembers Civil Relief Act (50
U.S.C. App. 533(c)) is amended by striking ``90 days'' and inserting
``one year''.
(b) Enhancement of Protections for Members of the Armed Forces Who
Serve in Operation Iraqi Freedom or Operation Enduring Freedom and
Their Dependents.--
(1) Scope of protections.--This subsection applies to an
obligation on real or personal property owned by a covered
member of the Armed Forces, or by a dependent of a covered
member of the Armed Forces, regardless of whether entered into
before, on, or after the member's entry onto military service,
on which the covered member or dependent, as the case may be,
is still obligated and that is secured by a mortgage, trust
deed, or other security in the nature of a mortgage.
(2) Sale or foreclosure.--
(A) In general.--A sale, foreclosure, or seizure of
property for breach of an obligation described in
paragraph (1) shall not be valid if made during, or
within one year after, the military service of a
covered member of the Armed Forces, or the military
service of the covered member of the Armed Forces
concerned in the case of a dependent of such a member.
(B) No waiver.--The limitations of subparagraph (A)
are not waiveable by a covered member of the Armed
Forces pursuant to section 107 of the Servicemembers
Civil Relief Act (50 U.S.C. App. 517).
(3) Prohibition on actions for nonpayment or default.--No
court shall have jurisdiction to hear any civil action against
a covered member of the Armed Forces or a dependent of a
covered member of the Armed Forces for nonpayment or default on
an obligation described in paragraph (1) during, or within one
year after, the military service of the covered member or the
covered member Armed Forces concerned, as the case may be.
(4) Responsibilities of obligors.--In the event a sale,
foreclosure, or seizure of property for breach of an obligation
described in paragraph (1) is prohibited by operation of
paragraph (2) or (3), the obligor on the obligation shall--
(A) notify the covered member of the Armed Forces
or dependent concerned, in writing, of the outstanding
liability of the covered member or dependent, as the
case may be, for principal and interest on the
obligation; and
(B) if the obligor determines that a modification
of the obligation or a reduction in the outstanding
liability of the covered member or dependent for
principal, interest, or both on the obligation is in
the interest of the obligor and the covered member or
dependent, as the case may be, notify the covered
member or dependent, as the case may be, in writing,
of--
(i) such determination; and
(ii) the actions to be taken by obligor and
the covered member or dependent, as the case
may be, to effectuate the modification or
reduction.
(5) Effect of protections on future financial
transactions.--
(A) Covered members.--The application of paragraph
(2), (3), (4), or (5) to an obligation described in
paragraph (1) of a covered member of the Armed Forces
shall be deemed to constitute the receipt by the
covered member of a stay of a civil liability with
respect to the obligation under the Servicemembers
Civil Relief Act for purposes of section 108 of that
Act (50 U.S.C. App. 518).
(B) Dependents.--In the event of the application of
paragraph (2), (3), (4), or (5) to an obligation
described in paragraph (1) of a dependent of a covered
member of the Armed Forces, the dependent shall be
deemed to be a servicemember receiving a stay of a
civil liability with respect to the obligation under
the Servicemembers Civil Relief Act for purposes of
section 108 of that Act.
(6) Penalties.--The provisions of section 303(d) of the
Servicemembers Civil Relief Act (50 U.S.C. 533(d)) shall apply
to sales, foreclosures, and seizures of property, and attempted
sales, foreclosures, and seizures of property, prohibited by
paragraph (2).
(7) Definitions.--In this subsection:
(A) Covered member of the armed forces.--The term
``covered member of the Armed Forces'' means a member
of the Armed Forces, including a member of a Reserve
component of the Armed Forces, who serves on active
duty in the Armed Forces--
(i) in Iraq as part of Operation Iraqi
Freedom; or
(ii) in Afghanistan as part of Operation
Enduring Freedom.
(B) Dependent.--The term ``dependent'', in the case
of a covered member of the Armed Forces, has the
meaning given that term in section 101(4) of the
Servicemembers Civil Relief Act (50 U.S.C. App.
511(4)).
(C) Military service.--The term ``military
service'', in the case of a covered member of the Armed
Forces, means service of the member on active duty in
the Armed Forces--
(i) in Iraq as part of Operation Iraqi
Freedom; or
(ii) in Afghanistan as part of Operation
Enduring Freedom.
(8) Effective date.--This subsection shall take effect on
the date of the enactment of this Act.
SEC. 7. ENCOURAGEMENT OF QUALIFIED LOAN MODIFICATIONS AND WORKOUT PLANS
FOR MEMBERS OF THE ARMED FORCES WHO SERVE IN OPERATION
IRAQI FREEDOM OR OPERATION ENDURING FREEDOM AND THEIR
DEPENDENTS.
(a) Safe Harbor.--Absent specific contractual provisions to the
contrary, if a servicer of a residential mortgage loan enters into a
qualified loan modification or workout plan with a covered member of
the Armed Forces or the dependent of a covered member of the Armed
Forces, the servicer shall not be liable 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 in
loans on the pool;
(2) any person that insures any loan or any interest
referred to in paragraph (1) under any law or regulation of the
United States or any law or regulation of any State or
political subdivision of any State; or
(3) any other person or institution that may have a
financial or commercial relationship or association with the
persons described in paragraphs (1) and (2).
(b) Rule of Construction.--No provision of this section shall be
construed as limiting the ability of a servicer to enter into loan
modifications or workout plans other than qualified loan modification
or workout plans.
(c) Limitations on Safe Harbor.--Except for the provisions of
subsection (a) that limit liability for efforts to pursue qualified
loan modifications or workout plans, the provisions of this section
shall not be construed to affect or limit any other liability, duty, or
other fiduciary obligation of the servicer to the investors and holders
of beneficial interests in the pooled loans to a securitization
vehicle, as prescribed by any other specific contractual provision
agreed upon, or any other liability, duty, or other fiduciary
obligation set forth under any--
(1) law or regulation of the United States;
(2) law or regulation of any State or political subdivision
of any State; or
(3) established and approved standards for best practices
of any industry or trade group.
(d) Definitions.--In this section:
(1) Covered member of the armed forces.--The term ``covered
member of the Armed Forces'' means a member of the Armed
Forces, including a member of a Reserve component of the Armed
Forces, who serves on active duty in the Armed Forces--
(A) in Iraq as part of Operation Iraqi Freedom; or
(B) in Afghanistan as part of Operation Enduring
Freedom.
(2) Dependent.--The term ``dependent'', in the case of a
covered member of the Armed Forces, has the meaning given that
term in section 101(4) of the Servicemembers Civil Relief Act
(50 U.S.C. App. 511(4)).
(3) Qualified loan modification or workout plan.--The term
``qualified loan modification'' or ``workout plan'' means a
modification or plan that--
(A) is scheduled to remain in place until the
covered member of the Armed Forces or dependent
concerned sells or refinances the property, or for at
least 5 years from the date of adoption of the plan,
whichever is sooner;
(B) does not provide for a repayment schedule that
results in negative amortization at any time;
(C) does not require the covered member or
dependent to pay additional points and fees;
(D) materially improves the ability of the covered
member or dependent to--
(i) prevent foreclosure; and
(ii) resume a reasonable repayment
schedule, as such schedule may be based on the
total debt to income ratio of the covered
member or dependent;
(E) would reasonably reduce the likelihood of
default of foreclosure during the life of the
modification or plan;
(F) may waive any prepayment penalties that
reasonably inhibited the covered member or dependent
from fulfilling his or her ability to pay down the
principal on such residential mortgage loan or maintain
regular payments on such residential mortgage loan, as
such regular payments may be defined by the terms of
the residential mortgage loan; and
(G) includes full and accurate disclosure to the
covered member of the terms of the modification or
workout plan, provided that such disclosures are
executed in easy to understand terms that demonstrate
how the covered member or dependent will benefit from
the new terms in such modification or workout plan as
compared with the terms and conditions of the previous
residential mortgage loan of the covered member or
dependent.
(4) Residential mortgage loan.--The term ``residential
mortgage loan'' means a loan that is secured by a lien on an
owner-occupied residential dwelling.
(5) Servicer.--The term ```servicer''' has the same meaning
as in section 6(i)(2) of the Real Estate Settlement Procedures
Act (12 U.S.C. 2605(i)(2)).
(6) Securitization vehicle.--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; and
(B) holds such loans.
SEC. 8. FINANCIAL SERVICES COUNSELING ON MORTGAGES AND MORTGAGE
FORECLOSURES FOR MEMBERS OF THE ARMED FORCES WHO SERVE IN
OPERATION IRAQI FREEDOM OR OPERATION ENDURING FREEDOM,
VETERANS, AND THEIR DEPENDENTS.
(a) Counseling Required.--
(1) In general.--The Secretary of Defense, in coordination
with the Secretary of Veterans Affairs and the Secretary of
Housing and Urban Development, shall provide financial services
counseling relating to mortgages and mortgage foreclosures to a
veteran, covered member of the Armed Forces, or dependent of
such veteran or covered member, upon request of such
individual.
(2) Provision at no cost to recipient.--Financial services
counseling shall be provided under this section at no cost to
the recipient.
(b) Annual Outreach Plan.--
(1) Plan required.--The Secretary of Defense shall, in
coordination with the Secretary of Veterans Affairs and the
Secretary of Housing and Urban Development, develop and
implement on an annual basis a plan for the provision of
outreach to veterans, covered members of the Armed Forces, and
their dependents on the financial services counseling available
under this section.
(2) Elements.--Each plan under this subsection shall
include--
(A) efforts to identify veterans, covered members
of the Armed Forces, or dependents who are not
otherwise enrolled in or registered for financial
counseling services under other programs administered
by the Secretary of Defense or the Secretary of
Veterans Affairs; and
(B) provisions for informing veterans, covered
members of the Armed Forces, and their dependents about
loan modification programs, workout plans, foreclosure
prevention, and other financial counseling programs
available to them through the Department of Defense,
the Department of Veterans Affairs, the Department of
Housing and Urban Development, nonprofit organizations,
and other Federal, State, and local initiatives.
(3) Consultation.--In developing each plan under this
subsection, the Secretary of Defense shall consult with, at a
minimum, the following:
(A) Directors or other responsible officials of
veterans service organizations.
(B) Representatives of other outreach programs for
veterans.
(C) Nonprofit organizations.
(D) Other appropriate Federal, State, or local
government agencies, individuals, or organizations.
(c) Covered Member of the Armed Forces Defined.--In this section,
the term ``covered member of the Armed Forces'' means a member of the
Armed Forces, including a member of a Reserve component of the Armed
Forces, who serves on active duty in the Armed Forces--
(1) in Iraq as part of Operation Iraqi Freedom; or
(2) in Afghanistan as part of Operation Enduring Freedom.
<all>
Introduced in Senate
Read twice and referred to the Committee on Veterans' Affairs.
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