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II
116TH CONGRESS
2D SESSION
S. 3509
To provide borrowers the right to request forbearance on mortgage loan
payments due to a declared disaster, and for other purposes.
IN THE SENATE OF THE UNITED STATES
MARCH 17, 2020
Mr. BROWN introduced the following bill; which was read twice and referred
to the Committee on Banking, Housing, and Urban Affairs
A BILL
To provide borrowers the right to request forbearance on
mortgage loan payments due to a declared disaster, and
for other purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. CONSUMER RIGHT TO REQUEST FORBEAR-
3
ANCE.
4
The Real Estate Settlement Procedures Act of 1974
5
(12 U.S.C. 2601 et seq.) is amended—
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(1) in section 3 (12 U.S.C. 2602)—
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(A) in paragraph (8), by striking ‘‘and’’ at
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the end;
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(B) in paragraph (9), by striking the pe-
1
riod at the end and inserting ‘‘; and’’; and
2
(C) by adding at the end the following:
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‘‘(10) the term ‘declared disaster’ means—
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‘‘(A) the coronavirus disease (COVID–19)
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pandemic; and
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‘‘(B) a major disaster or emergency de-
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clared by the President under section 401 or
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501, respectively, of the Robert T. Stafford Dis-
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aster Relief and Emergency Assistance Act (42
10
U.S.C. 5170, 5191).’’; and
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(2) in section 6 (12 U.S.C. 2605)—
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(A) in subsection (k)(1)—
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(i) in subparagraph (D), by striking
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‘‘or’’ at the end;
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(ii) by redesignating subparagraph
16
(E) as subparagraph (G); and
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(iii) by inserting after subparagraph
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(D) the following:
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‘‘(E) initiate any judicial or non-judicial
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foreclosure process, move for a foreclosure judg-
21
ment or order of sale, or execute a foreclosure-
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related eviction or foreclosure sale during the
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180-day period following a declared disaster in
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the area in which the property is located;
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‘‘(F) fail to toll the time in a foreclosure
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process on a property for not less than 180
2
days following a declared disaster in the area in
3
which the property is located; or’’; and
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(B) by adding at the end the following:
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‘‘(n) CONSUMER RIGHT TO REQUEST FORBEAR-
6
ANCE.—
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‘‘(1) IN GENERAL.—A borrower experiencing a
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financial hardship due, directly or indirectly, to a de-
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clared disaster may request forbearance from any
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mortgage payment for not less than 180 days, which
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may be extended for an additional 180 days at the
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request of the borrower, provided that, at the bor-
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rower’s request, either the initial or extended period
14
of forbearance may be shortened.
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‘‘(2) ACCRUAL OF INTEREST OR FEES.—During
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a period of forbearance described in paragraph (1),
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no interest or other fees shall accrue on the bor-
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rower’s account.
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‘‘(3) REQUEST FOR RELIEF.—A borrower may
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submit a request for forbearance under paragraph
21
(1) to their servicer, either orally or in writing, af-
22
firming that the borrower is experiencing hardship
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due, directly or indirectly, to a declared disaster.
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‘‘(4) REQUIREMENTS FOR SERVICERS.—
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‘‘(A) NOTIFICATION.—
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‘‘(i) IN GENERAL.—Each servicer of a
2
federally related mortgage loan shall notify
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the borrower of their right to request for-
4
bearance under paragraph (3)—
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‘‘(I) not later than 14 days after
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the date of a declared disaster or, in
7
the case of the coronavirus disease
8
(COVID–19) pandemic, not later than
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14 days after the date of enactment of
10
this Act; and
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‘‘(II) during the incident period
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for a declared disaster and during not
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less than the 180-day period following
14
that incident period—
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‘‘(aa) on each periodic state-
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ment provided to the borrower;
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and
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‘‘(bb) in any oral or written
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communication by the servicer
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with or to the borrower.
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‘‘(ii) MANNER OF NOTIFICATION.—
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‘‘(I) WRITTEN
NOTIFICATION.—
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Any
written
notification
required
24
under clause (i)—
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‘‘(aa) shall be provided—
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‘‘(AA) in English and
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Spanish and in any addi-
3
tional languages in which
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the servicer communicates,
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including the language in
6
which the loan was nego-
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tiated, to the extent known
8
by the servicer; and
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‘‘(BB) at least as clear-
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ly and conspicuously as the
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most clear and conspicuous
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disclosure on the document;
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and
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‘‘(bb) may be provided by
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first-class mail or electronically,
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if the borrower has otherwise
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consented to electronic commu-
18
nication with the servicer and has
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not revoked such consent.
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‘‘(II) ORAL NOTIFICATION.—Any
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oral notification required under clause
22
(i) shall be provided in the language
23
the servicer otherwise uses to commu-
24
nicate with the borrower.
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‘‘(III)
WRITTEN
TRANS-
1
LATIONS.—In providing written notifi-
2
cations
in
languages
other
than
3
English
under
subclause
(I),
a
4
servicer may rely on written trans-
5
lations developed by the Federal
6
Housing Finance Agency or the Bu-
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reau.
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‘‘(B) OTHER
REQUIREMENTS.—Upon re-
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ceiving a request for forbearance from a con-
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sumer under paragraph (3), a servicer shall—
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‘‘(i) with no additional documentation
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required other than the borrower’s attesta-
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tion to a hardship caused by the declared
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disaster and with no fees, interest, or other
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penalties charged to the borrower in con-
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nection with the forbearance, provide the
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forbearance for not less than 180 days,
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which may be extended for an additional
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180 days at the request of the borrower,
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provided that, at the borrower’s request,
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either the initial or extended period of for-
22
bearance may be shortened;
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‘‘(ii) while such forbearance is in ef-
24
fect, pay or advance funds to make dis-
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bursements in a timely manner from any
1
escrow account established on the mort-
2
gage loan, and maintain regular commu-
3
nication with such borrower; and
4
‘‘(iii)(I) before the end of such for-
5
bearance, evaluate the borrower’s ability to
6
return to making regular mortgage pay-
7
ments;
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‘‘(II) if the borrower is able to return
9
to making regular mortgage payments at
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the end of the forbearance period—
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‘‘(aa) modify the borrower’s loan
12
to extend the term for the same pe-
13
riod as the length of the forbearance,
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with all payments that were not made
15
during the forbearance distributed at
16
the same intervals as the borrower’s
17
existing payment schedule and evenly
18
distributed across those intervals, with
19
no penalties or additional interest ac-
20
crued or modification fee charged to
21
the borrower; and
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‘‘(bb) notify the borrower in writ-
23
ing of the extension, including provi-
24
sion of a new payment schedule and
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date of maturity, and that the bor-
1
rower shall have the election of pre-
2
paying the forborne payments at any
3
time, in a lump sum or otherwise;
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‘‘(III) if the borrower is financially
5
unable to return to making regular mort-
6
gage payments at the end of the forbear-
7
ance period—
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‘‘(aa) evaluate the borrower for
9
all loan modification options, includ-
10
ing—
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‘‘(AA) further extending the
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borrower’s repayment period;
13
‘‘(BB) reducing the prin-
14
cipal balance of the loan; or
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‘‘(CC) other modification op-
16
tions available to the servicer
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under the terms of their loan and
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existing laws and policies; and
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‘‘(bb) if the borrower qualifies for
20
such a modification, modify the bor-
21
rower’s loan to provide a loan with
22
such terms as to provide an affordable
23
payment, with no penalties, additional
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interest, or modification fees charged
1
to the borrower; and
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‘‘(IV) if a borrower is granted a for-
3
bearance on payments that would be owed
4
pursuant to a trial loan modification
5
plan—
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‘‘(aa) any forbearance of pay-
7
ments shall not be treated as missed
8
or delinquent payments or otherwise
9
negatively affect the borrower’s ability
10
to complete their trial plan; and
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‘‘(bb) any past due amounts as of
12
the end of the trial period, including
13
unpaid interest, real estate taxes, in-
14
surance premiums, and assessments
15
paid on the borrower’s behalf, will be
16
added to the mortgage loan balance,
17
but only to the extent that such
18
charges are not fees associated with
19
the granting of the forbearance, such
20
as late fees, modification fees, or un-
21
paid interest from the period of the
22
forbearance.’’.
23
Æ
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