Rep. Elijah Cummings (D-Md.) introduced a bill in the House of Representatives pushing for more requirements such as modifications and disclosures before servicers can file a foreclosure case.
The bill, H.R. 1477, is a companion to S.489 introduced by Sen. Jack Reed (D-R.I.). Both bills would apply to loans not only covered by the U.S. government, including the Federal Housing Administration and the government-sponsored enterprises, but to all mortgages falling under the supervision of the Consumer Financial Protection Bureau.
The legislation also provides $1 billion to the National Housing Trust Fund for state and local governments to access when establishing foreclosure mediation programs and other purposes. And it establishes other requirements to these servicers.
"This legislation will force servicers to staff up," Cummings said in a conference call with reporters.
Servicers cannot pursue a foreclosure on these loans until the borrower has been considered for a modification, ending the practice of "dual-tracking," according to the bill. It also requires lenders to show they have the legal right to foreclose and provides an appeals process for homeowners who are denied a modification.
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