Bill > S2093

This bill, the Preserving American Homeownership Act of 2012, mandates that the Director of the Federal Housing Finance Agency and the Federal Housing Commissioner each establish pilot programs for "shared appreciation mortgage modifications." These modifications are designed to help homeowners facing financial hardship with "covered mortgages," which are loans sold to or insured by government-sponsored enterprises like Fannie Mae or Freddie Mac, or insured by the Federal Housing Administration (FHA), and are secured by the homeowner's primary residence. The goal of these modifications is to reduce the loan-to-value ratio (the amount owed compared to the home's value) to 95% within three years, potentially by reducing the principal owed. If a principal reduction doesn't make monthly payments affordable, the interest rate may also be lowered. Crucially, homeowners participating in these pilot programs would agree to pay back a portion of any increase in their home's value, up to 50%, to the investor (lender or trustee) when they sell or refinance their home. These programs aim to provide a better financial outcome for investors than foreclosure and ensure a positive return on investment after accounting for the principal and interest reductions. The bill also outlines requirements for determining home values, homeowner eligibility, and notification procedures for capital improvements.