Put simply, the Hope for Homeowner’s Act of 2008 offers government guarantees to lenders who have determined that working with a homeowner under the guidelines of the Act is better for the lender than foreclosing the loan. Here are some key points:

• The lender has to be willing to write down a loan to 90% of the home’s value. In other words, the existing mortgage lender has to be willing to reduce the balance of the mortgage so that there’s a 10% equity cushion in the property.
• The existing mortgage must have originated before January 1, 2008.
• The program is available for a primary residence only.
• The Borrower must be devoting more than 31% of their income to mortgage payments.
• The Borrower’s income must be verified and the Borrower must financially qualify for the new loan.
• The Borrower must share the profit from the sale of the home with the government.  

As of this writing very few homeowners have applied to participate in this program and it is not apparent how many lenders will be willing to write down loan balances to meet the 90% loan to value requirement.  Lenders, if they are willing to take the write-down, would avoid the expense and risk of foreclosure, and benefit from rebounding property values.  They would also benefit from FHA Insurance.