The section of the housing bill designed to help troubled homeowners is “Title IV – Hope for Homeowners”. We’ve cut and pasted key highlights from the House’s version of the bill, and added some notes and comments.

• The mortgagor shall provide certification to the Secretary that the mortgagor has not intentionally defaulted on the mortgage or any other debt, and has not knowingly, or willfully and with actual knowledge, furnished material information known to be false for the purpose of obtaining any eligible mortgage.
• As of March 1, 2008, the mortgagor shall have had a ratio of mortgage debt to income, taking into consideration all existing mortgages of that mortgagor at such time, greater than 31 percent.
• The principal obligation amount of the refinanced eligible mortgage to be insured shall–
  (A) be determined by the reasonable ability of the mortgagor to make his or her mortgage payments, as such ability is determined by the Secretary pursuant to section 203(b)(4) or by any other underwriting standards established by the Board; and

(B) not exceed 90 percent of the appraised value of the property.

• SHARED APPRECIATION – the bill allows lenders who have forgiven debt on your property to share in any future appreciation of your home to help recoup some of their losses.
• The program is voluntary on the part of the lender. They are not obligated to do this.
• PROHIBITION ON SECOND LIENS- A mortgagor may not grant a new second lien on the mortgaged property during the first 5 years of the term (ie, no lines of credit, etc).
• DOCUMENTATION AND VERIFICATION OF INCOME- In complying with the FHA underwriting requirements under the HOPE for Homeowners Program under this section, the mortgagee under the mortgage shall document and verify the income of the mortgagor by procuring an Internal Revenue Service transcript of the income tax returns of the mortgagor for the 2 most recent years for which the filing deadline for such years has passed and by any other method, in accordance with procedures and standards that the Board or the Secretary shall establish. In other words – no more stated income!!
  
• Must be your primary residence.
• Premiums– For each refinanced eligible mortgage insured under this section, the Secretary shall establish and collect:

(1) at the time of insurance, a single premium payment in an amount equal to 3 percent of the amount of the original insured principal obligation of the refinanced eligible mortgage, which shall be paid from the proceeds of the mortgage being insured under this section, through the reduction of the amount of indebtedness that existed on the eligible mortgage prior to refinancing; and

(2) in addition to the premium required under paragraph (1), an annual premium in an amount equal to 1.5 percent of the amount of the remaining insured principal balance of the mortgage.

• Equity and Appreciation- APPRECIATION IN VALUE– For each eligible mortgage insured under this section, the Secretary and the mortgagor of such mortgage shall, upon any sale or disposition of the property to which such mortgage relates, each be entitled to 50 percent of any appreciation in value of the appraised value of such property that has occurred since the date that such mortgage was insured under this section.