,i #aacth ,,congress #ast ,session ,h4 ,r4 #aged ,,in ,,the ,,house ,,of ,,representatives ,april #be1 #bjac ,mr4 ,peters of ,michigan 7for himself1 ,mr4 ,ross1 and ,mr4 ,ellison7 introduced the following bill2 which was referred to the ,committee on ,financial ,services ,a ,,bill ,to establish pilot programs to encourage the use of shared appreciation mortgage modifications1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,preserving ,american ,homeownership ,act of #bjac4 #b4 ,findings ,the ,congress finds the following3 7#a7 ,the stability of the economy1 housing market1 and neighborhoods of the ,united ,states depends upon reducing the number of foreclosures in the ,united ,states4 7#b7 ,homeowners struggling to make payments on homes with mortgages that are deeply underwater are some of the most at risk of foreclosure4 7#c7 ,a properly carried out principal modification program will preserve the assets of the government-sponsored mortgage enterprises assets and reduce taxpayer losses1 consistent with the mission of the ,federal ,housing ,finance ,agency as the enterprises' conservator1 and will help foster a more resilient national housing market4 #c4 ,shared appreciation mortgage modification pilot programs 7a7 ,definitions ,in this section-- 7#a7 the term capital improvement means a home improvement described in table #d of ,publication #ecj of the ,internal ,revenue ,service1 or any successor thereto2 7#b7 the term covered mortgage means a mortgage-- 7,a7 that is-- 7i7 sold to the ,federal ,national ,mortgage ,association1 the ,government ,national ,mortgage ,association1 or the ,federal ,home ,loan ,mortgage ,corporation2 or 7ii7 insured under title ,,ii of the ,national ,housing ,act 7#ab ,u4,s4,c4 #agjg et seq472 7,b7 that is secured by real property that is the primary residence of a homeowner2 7,c7 that has an outstanding principal balance of an amount that is greater than the appraised value of the real property securing the mortgage1 on or about the date on which the homeowner is approved to participate in the pilot program under subsection 7b72 7,d7 with respect to which the homeowner is1 both as of the date of the enactment of this ,act and as of the date of the modification under a pilot program under subsection 7b7-- 7i7 not fewer than #fj days delinquent2 or 7ii7 at risk of imminent default2 and 7,e7 of a homeowner who has a documented financial hardship that prevents or will prevent the homeowner from making mortgage payments2 7#c7 the term ,director means the ,director of the ,federal ,housing ,finance ,agency2 7#d7 the term enterprise has the same meaning as in section #acjc of the ,federal ,housing ,enterprises ,financial ,safety and ,soundness ,act of #aiib 7#ab ,u4,s4,c4 #dejb72 7#e7 the term homeowner means the mortgagor under a covered mortgage2 7#f7 the term investor means-- 7,a7 the mortgagee under a covered mortgage2 or 7,b7 in the case of a covered mortgage that collateralizes an asset-backed security1 as defined in section #c7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;c7a771 the trustee for the asset-backed security2 7#g7 the term pilot program means a pilot program established under subsection 7b72 and 7#h7 the term shared appreciation mortgage modification means a modification of a covered mortgage in accordance with subsection 7c74 7b7 ,pilot programs established ,the ,director of the ,federal ,housing ,finance ,agency and the ,federal ,housing ,commissioner1 in consultation with the ,secretary of the ,treasury1 shall each establish a pilot program to encourage1 through assistance provided under the ,home ,affordable ,modification ,program under the ,making ,home ,affordable initiative of the ,secretary of the ,treasury1 the use of shared appreciation mortgage modifications that are designed to return greater cash flow to investors than other loss-mitigation activities1 including foreclosure1 and result in positive net present value for the investor4 7c7 ,shared appreciation mortgage modification ,for purposes of the pilot program1 a shared appreciation mortgage modification shall-- 7#a7 reduce the loan-to-value ratio of a covered mortgage-- 7,a7 to #aae percent immediately upon such modification1 by immediately reducing the amount of principal under the covered mortgage accordingly2 and 7,b7 to #ie percent within #c years1 by reducing the amount of principal under the covered mortgage by #a_/c at the end of each year for #c years2 7#b7 reduce the interest rate for a covered mortgage1 if a reduction of principal under paragraph 7#a7 would not result in a reduced monthly payment that is affordable to the homeowner2 7#c7 reduce the amount of any periodic payment required to be made by the homeowner1 so that the amount payable by the homeowner is equal to the amount that would be payable by the homeowner if1 on the date on which the shared appreciation mortgage modification takes effect-- 7,a7 all reductions of the amount of principal under paragraph 7#a7 had been made2 and 7,b7 any reduction in the interest rate under paragraph 7#b7 for which the covered mortgage is eligible had been made2 7#d7 require the homeowner to pay to the investor after refinancing or selling the real property securing a covered mortgage a percentage of the amount of any increase 7not to exceed #ej percent of such increase7 in the value of the real property during the period beginning on the date on which the homeowner was approved to participate in the pilot program and ending on the date of the refinancing or sale that is equal to the percentage by which the investor reduced the amount of principal under the covered mortgage under paragraph 7#a72 and 7#e7 result in a positive net present value for the investor after taking into account the principal reduction under paragraph 7#a7 and1 if necessary1 any interest rate reduction under paragraph 7#b74 7d7 ,determination of value of home 7#a7 ,in general ,for purposes of this section1 the value of real property securing a covered mortgage shall be determined by a licensed appraiser who is independent of and does not otherwise do business with the homeowner1 servicer1 investor1 or an affiliate of the homeowner1 servicer1 or investor1 except that1 where available1 such value may be determined using a reliable estimate of value provided by an automated valuation model of an enterprise4 7#b7 ,time for determination ,the value of real property securing a covered mortgage shall be determined on a date that is as close as practicable to the date on which a homeowner begins to participate in a pilot program4 7#c7 ,cost 7,a7 ,responsibility for cost 7i7 ,initial cost ,the investor shall pay the cost of an appraisal or other determination of value under paragraph 7#a74 7ii7 ,deduction from homeowner share ,at the option of the investor1 the cost of an appraisal or other determination of value under paragraph 7#a7 may be added to the amount paid by the homeowner to the investor under subsection 7c77#d74 7,b7 ,reasonableness of cost ,the cost of an appraisal or other determination of value under paragraph 7#a7 shall be reasonable1 as determined by the ,director and the ,federal ,housing ,commissioner4 7#d7 ,second appraisal ,at the time of refinancing or sale of real property securing a covered mortgage1 the investor may request a second appraisal of the value of the real property1 at the expense of the investor1 by a licensed appraiser who is independent of and does not otherwise do business with the homeowner1 servicer1 investor1 or an affiliate of the homeowner1 servicer1 or investor1 if the investor believes that the sale price or claimed value at the time of the refinancing is not an accurate reflection of the fair market value of the real property4 7e7 ,eligibility for reduction of principal ,each pilot program shall provide that a homeowner is not eligible for a reduction in the amount of principal under a covered mortgage under a shared appreciation mortgage modification if1 after the homeowner begins participating in the pilot program1 the homeowner-- 7#a7 7,a7 is delinquent on more than #c payments under the shared appreciation mortgage modification during any of the #c successive #a-year periods beginning on the date on which the shared appreciation mortgage modification is made2 and 7,b7 fails to be current with all payments described in paragraph 7#a7 before the end of each #a-year period described in paragraph 7#a72 or 7#b7 obtains a mortgage1 loan1 or credit1 or incurs any other debt1 that creates any additional lien on the residence that is subject to the covered mortgage for which the shared appreciation mortgage modification or for which such residence is used as collateral4 ,the ,director shall require1 as a condition for participation in a pilot program by a homeowner1 that the homeowner enter into such agreements as the ,director considers necessary to ensure compliance with this subsection4 7f7 ,notification 7#a7 ,in general ,each pilot program shall require that the servicer of a covered mortgage transmit to each homeowner participating in the pilot program written notice1 in clear and simple language1 of how to maintain and submit any documentation of capital improvements that is necessary to ensure that the shares of any increase in the value of the real property securing the covered mortgage to which the investor and the homeowner are entitled are determined accurately4 7#b7 ,timing ,the pilot program shall require that a servicer provide the notice described in paragraph 7#a7-- 7,a7 before the homeowner accepts a shared appreciation mortgage modification2 and 7,b7 before the homeowner sells or refinances the real property securing the covered mortgage4 7g7 ,participation by servicers ,the ,director shall require each enterprise to require that any servicer of a covered mortgage in which the enterprise is an investor participate in the pilot program of the ,federal ,housing ,finance ,agency by offering shared appreciation mortgage modifications to a random and statistically significant sampling of homeowners with covered mortgages4 7h7 ,mortgage insurance ,the ,director shall-- 7#a7 provide that an enterprise may negotiate regarding a shared appreciation mortgage modification of a covered mortgage with any provider of mortgage insurance for a mortgage on the property subject to the covered mortgage2 and 7#b7 allow advance claim agreements with respect to such mortgage insurance policies4 7i7 ,maintenance of lien status ,a shared appreciation mortgage modification of a covered mortgage under a pilot program under this section shall not impair the priority status of liens on the residence that is subject to the mortgage4 7j7 ,studies and reports ,the ,director and the ,federal ,housing ,commissioner shall-- 7#a7 conduct annual studies of the pilot programs of the ,federal ,housing ,finance ,agency and the ,federal ,housing ,administration1 respectively2 and 7#b7 submit a report to the ,congress containing the results of each study at the end of each of the #c successive #a-year periods beginning on the date on which the pilot program is established4 7k7 ,termination ,on and after the date that is #b years after the date of enactment of this ,act1 the ,director and the ,federal ,housing ,commissioner may not enter into any agreement under the pilot program with respect to a shared appreciation mortgage modification4