The Center For Debt Management
Debt Relief

Debt Consultation

Debt Settlement

Debt Consolidation

Debt Management

Credit Counseling

Filing Bankruptcy

Budget Software

Tax Debt Relief

Student Debt

Business Debt

Stop Foreclosure

Credit Report

Legal Resources

Credit and Financing

Financial Resources

Income Resources

US Tax Center

Insurance Center

Financial Library

Financial Bookstore


Home Ownership Preservation Loans

The FDIC is proposing that Congress authorize the Treasury Department to make loans to borrowers with unaffordable mortgages to pay down up to 20 percent of their principal. The repayment and financing costs for these Home Ownership Preservation (HOP) loans would be borne by mortgage investors and borrowers. This approach is scaleable, administratively simple, and will avoid unnecessary foreclosures to help stabilize mortgage and housing prices.

This proposal is designed to result in no cost to the government:

  • Borrowers must repay their restructured mortgage
    and the HOP loan.

  • To enter the program, mortgage investors pay Treasury's financing costs and agree to concessions on the underlying mortgage to achieve an affordable payment.

  • Treasury would have a super-priority interest — superior
    to mortgage investors' interest — to guarantee repayment.
    If the borrower defaulted, refinanced or sold the property, Treasury would have a priority recovery for the amount of
    its loan from any proceeds.

  • The government has no continued obligation
    and the loans are repaid in full.

Mortgage Restructuring:

  • Eligible, unaffordable mortgages would be paid down by up to 20 percent and restructured into fully-amortized, fixed rate loans for the balance of the original loan term at the lower balance. New interest rate capped at Freddie Mac 30-year fixed rate.

  • Restructured mortgages cannot exceed a debt-to-income ratio for all housing-related expenses greater than 35 percent of the borrower's verified current gross income ('front-end DTI'). Prepayment penalties, deferred interest, or negative amortization are barred.

  • Mortgage investors would pay the first five years of interest due to Treasury on the HOP loans when they enter the program. After 5 years, borrowers would begin repaying the HOP loan at fixed Treasury rates.

  • Servicers would agree to periodic special audits by a federal banking agency.


  • Mortgage investors would apply to Treasury for funds and would be responsible for complying with the terms for the HOP loans, restructuring mortgages, and subordinating their interest to Treasury.

  • Administratively simple. Eligibility is determined by origination documentation and restructuring is based on verified current income and restructured mortgage payments.


  • A Treasury public debt offering of $50 billion would be sufficient to fund modifications of approximately 1 million loans that were "unsustainable at origination." Principal and interest costs are fully repaid.

Eligible Mortgages:

Applies only to mortgages for owner-occupied residences that are:

    1. Unaffordable – defined by front-end
      DTIs exceeding 40 percent at origination.
    2. Below the FHA conforming loan limit.
    3. Originated between January 1, 2003 and June 30, 2007.

Over 2,000 Pages of Content
Center For Debt Management

Center For Debt Management

The Center For Debt Management

Helping Consumers Save Money and Reduce Debt Is Our Only Business!

We invite you to explore the sectors listed below. We promise that you'll find exceptional values, offers and resources to reduce your living expenses and to enjoy life! But First—if you're over-your-head in debt—get a free no-obligation debt consultation right now!

Debt Management and Financial Services! The Internet's oldest and most comprehensive debt management agency! Resources for debt management, consumer credit counseling, debt consolidation loans, debt settlements, legal aid, financial aid, credit and financing, credit reports, budget software, insurance, income resources, tax assistance and more. Get out of Debt! Call Now — 1800DEBT.COM

Established In 1989 and Serving The Online Community Since 1992!

Get Out Of Debt: Call

Center For Debt Management