HUD 92917 Hope for Homeowners

Appreciation Worksheet
FHA’s HOPE for Homeowners Program:
Understanding of Key Provisions of Appreciation Sharing

U.S. Department of Housing and Urban
Development
Office of Housing
Federal Housing Commissioner
OMB Approval No. -----(Exp. -------)

Loans made under the FHA’s HOPE for Homeowners (H4H) Program include a requirement
that the borrower share future property appreciation with HUD. As an existing subordinate
mortgage lien holder, in exchange for a full release of your lien, you may be eligible to receive:
An upfront payment received at settlement of the new H4H loan, or
An interest in any future appreciation actually received by HUD when the property is
sold.
Determining the Upfront Payment and Appreciation Share
During underwriting of the H4H loan the originating lender will calculate the upfront payment or
future appreciation interest amount for each subordinate lien holder according to the procedures
below. The lender will:
Request payoff statements identifying the total principal and interest due to each existing
mortgage lien holder.
Add the unpaid principal and interest of liens held by each subordinate mortgage lien holder and
all holders with liens senior to that subordinate lien holder (as of the first day of the month in
which the borrower has made application) to determine the cumulative outstanding debt relevant
to that lien holder. Interest may not be calculated at a default rate of interest, but must be
calculated at the contract rate in effect prior to the default.
Divide the cumulative debt by the new appraised value to determine a cumulative combined
loan-to-value ratio (CLTV) relevant to that lien holder.
Cumulative CLTV Illustration
Amount Owed
Principal (P)

1st Lien P&I

2nd Lien P&I

3rd Lien P&I

Total P&I

158,500

20,000

40,000

218,500

Accrued Interest(I)

10,900

2,200

4,400

17,500

Total P&I

169,400

22,200

44,400

236,000

Cumulative P&I as a % of Current
Appraised Value of $150,000

112.9%

127.8%

157.3%

Using the matrix below, the lender will calculate the upfront payment and maximum future
appreciation interest amount for each subordinate mortgage lien holder by multiplying the amount
of that lien holder’s write-off by the percentage factor in the matrix.

www.hud.gov

espanol.hud.gov

form HUD-92917-H4H

2
Calculation of
Upfront Payment or Future Appreciation Payment to
Subordinate Lien Holders
Subordinate Lien Holder
Cumulative CLTV >135%

Upfront Payment Option
Percent of Unpaid Principal and Interest a
Lien Holder is Eligible to Receive#
3%

Future Appreciation Payment Option
Percent of Unpaid Principal and Interest* a
Lien Holder is Eligible to Receive#
9%

Cumulative CLTV <135%

4%

12%

* A payment to a subordinate mortgage lien holder will depend on actual appreciation of the
property as determined in accordance with 24 CFR 4001.120. Payment will be made according to
the subordinate lien holder’s position of priority in relation to the property at the time the Program
mortgage is originated.
# Payment will be based upon principal and interest as of the first day of the month in which the
borrower made application for the Program mortgage, calculated at the pre-default contract rate of
interest.
Upfront Payment Example
Assume that at origination of the H4H loan a second mortgage lien holder agreed to forgive debt in
the amount of $22,200 and a third mortgage lien holder agreed to forgive debt in the amount of
$44,400. Both of these lien holders have elected to receive upfront payments and assign any future
appreciation rights to HUD.
The second lien holder has a CLTV of 127.8%. Because this is less than 135% of the appraised
value of the property, the second lien holder is entitled to 4% of its total write off of $22,200 for
an upfront payment of $888.
The third lien holder has a CLTV of 157.3%. Because this is more than 135% of the appraised
value of the property, the third lien holder is entitled to 3% of its total write off of $44,400 for an
upfront payment of $1,332.
Future Payment Example
Assume that at the sale or other disposition of the property referenced above in the Cumulative
CLTV Illustration, the difference between the property’s appraised value at origination of the H4H
loan and the net sale proceeds resulted in $20,000 of appreciation. HUD is entitled to 50% of this
appreciation ($10,000) and will share it with subordinate mortgage lien holders as follows:
The second mortgage lien holder has a CLTV of 127.8%. Because the CLTV is less than 135%
of the current appraised value, the second lien holder is entitled to receive up to 12% of its total
write off of $22,200, for a maximum payment of $2,664. From HUD’s $10,000 share, the
second lien holder receives the first $2,664.
The third mortgage lien holder has a CLTV of 157.3%. Because the CLTV is more than 135%
of the current appraised value, the third lien holder is entitled to receive up to 9% of its total
write off of $44,400, for a maximum payment of $3,996.
HUD retains the balance of $3,340 ($2,664 + $3,996 + $3,340 = $10,000).
In this example, it is assumed that the borrower made no capital improvements to the property prior
to sale and all subordinate mortgage holders were eligible and elected to receive a share in future
appreciation. Please see Mortgagee Letter 2008-30 for further information.
At no time will HUD make payments that exceed HUD’s realized share of appreciation.

form HUD-92917-H4H

3
Combined Payment Example
Using the Future Payment Example above, assume that the second mortgage lien holder elected the
upfront payment option. That lien holder transferred its interest in the property’s future appreciation
share to HUD. If the third mortgage lien holder elected the future appreciation option, in the event
of a sale where HUD was entitled to a $10,000 appreciation share, the distribution would be as
follows: the first $2,664 to HUD; $3,996 to the third mortgage lien holder; the balance of $3,340 to
HUD.
Upfront Payment and Appreciation Sharing Terms and Conditions
Only the holders of subordinate mortgage liens that were originated before January 1, 2008 are
eligible.
Subordinate mortgage lien holders whose total principal and interest write-off as of the first day
of the month in which the mortgagor made application for the Program mortgage is less than
$2,500 are not eligible.
Only mortgage principal and note rate interest may be included in the amount used to determine
the cumulative debt outstanding used in calculating the CLTV ratio. No other costs, fees, or
expenses advanced on behalf of the borrower are allowed.
The lien holder must fully release the borrower from the debt and may not have any side
agreements with the borrower for repayment that survive the date of settlement of the new loan.
Lenders accepting the upfront appreciation share option have no recourse or claim on future
appreciation..
At settlement, subordinate lien holders who have elected the future payment option will receive
an Appreciation Share Certificate that evidences an interest in the future appreciation of the
mortgaged property, with payment conditional on the value of HUD’s appreciation share.
Future appreciation distributions will be made only upon sale or disposition of the property,
which could be many years in the future. There is no provision for forcing an earlier sale or
distribution.
The future appreciation option involves risk. In the event that there is only a modest increase
or a decrease in a property’s value there may be insufficient future appreciation available for
distribution to any or all subordinate mortgage lien holders, in which case they will have no
recourse against the Government or the borrower.
In the event the H4H loan is not endorsed for FHA insurance the ASC becomes void.

form HUD-92917-H4H

4

FHA’s HOPE for Homeowners Program:
Upfront Payment and Future Appreciation Sharing Worksheet
and Certification

U.S. Department of Housing and
Urban Development
Office of Housing
Federal Housing Commissioner
OMB Approval No. -----(Exp. -------)

Borrower Name(s)

_______________________________________________

Property Address

_______________________________________________

Originating Lender Name

_______________________________________________

FHA Case Number

_______________________________________________

Subordinating Lender / Lien Position __________________________________
Appraised Value / Appraisal Date
Amount Owed

_______________________
1st Lien
P&I*

2nd Lien
P&I*

__________

_____________________

3rd Lien P&I*

Total P&I*

Principal (P)
Accrued Interest (I*) + _______ + _______ + _______ + ___________
Total P&I* = 0
= 0
= 0
=0
Cumulative P&I* as a % of
Current Appraised Value of
$____________
* Payment is calculated based on the P&I as of the first day of the month of application for the Program Loan with interest at the pre-default contract
rate.

Upfront Payment Option
OR
Future Payment Option

0.00

________________ x ____________ = $________________
Total P&I Write Off
Matrix %
Upfront Payment
________________ x
Total P&I Write Off

0.00

____________ = $________________
Matrix %
Max Future Payment

By signing below, the undersigned certifies that the statements and information contained herein are
true and correct. On behalf of _____________________________, the undersigned subordinate
mortgage lien holder certifies that it will release in full all mortgages secured by the subject property
in exchange for:
[ ] A payment at settlement of the H4H loan in the amount of $___________________ ; OR,
[ ] An interest in future appreciation in the subject property to be paid from HUD’s share of said
appreciation, if any, in an amount not to exceed $_____________________.

form HUD-92917-H4H

5
__________________________________________________
Subordinate Lien Holder Authorized Signature / Title

___________________
Date

__________________________________________________
Subordinate Lien Holder Address

___________________
Telephone

__________________________________________________
Originating Lender Authorized Signature / Title

___________________
Date

Warning: It is a crime to knowingly make false statements to the United States on this or any other similar form. Penalties upon conviction can include
a fine and imprisonment. For details, see: Title 18 U.S. Code Sections 1001 and 1010. False statements may also be the basis for civil and/or
administrative penalties. For details, see: Title 31 U.S. Code Sections 3729 et seq., and 3801 et seq., as well as 12 U.S. Code Section 1735f-14.
The information collection requirements contained in this document have been submitted to the Office of Management and Budget (OMB)
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and are pending an OMB control number. In accordance with the
Paperwork Reduction Act, HUD may not conduct or sponsor, and a person is not required to respond to, a collection of information unless
the collection displays a currently valid OMB control number.

form HUD-92917-H4H