Relief due but HOPE has limits

*Certify to the government that they haven't "intentionally defaulted" on their current mortgage or on any other debt in order to refinance into a HOPE loan.

*Agree to use and occupy the refinanced house as their principal residence, and not own any additional houses.

An important and somewhat unusual feature of the program is the federal government's requirement that homeowner beneficiaries share any appreciation profits or equity gains from sales of their houses in subsequent years. The message here is that HOPE is no free ride. The refinancing process itself will essentially create new equity stakes for borrowers because the maximum loan amount will be 90 percent of the appraised market value of the property.

Borrowers who had been underwater and in serious default will suddenly find themselves with 10 percent equity stakes overnight. But they won't be able to tap that money quickly. If the home is sold within the first year after the refinancing, the FHA must be repaid the equity created in full. In sales occurring during the next four years, homeowners can retain rising percentages of the equity, up to 50 percent.

Under the legislation, the HOPE program could start as early as Oct. 1, but must terminate on Sept. 30, 2011. The unanswerable question hovering over the entire HOPE concept: Will enough lenders and investors agree to take the upfront losses required to participate?

kenharney@earthlink.net.