duction under paragraph (1) and, if necessary, any 
interest rate reduction under paragraph (2). 
(d) DETERMINATION OF VALUE OF HOME.— 
(1) IN GENERAL.—For purposes of this section, 
the value of real property securing a covered mort-
gage shall be determined by a licensed appraiser who 
is independent of and does not otherwise do business 
with the homeowner, servicer, investor, or an affil-
iate of the homeowner, servicer, or investor, except 
that, where available, such value may be determined 
using a reliable estimate of value provided by an 
automated valuation model of an enterprise. 
(2) 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 partici-
pate in a pilot program. 
(3) COST.— 
(A) RESPONSIBILITY FOR COST.— 
(i) INITIAL COST.—The investor shall 
pay the cost of an appraisal or other deter-
mination of value under paragraph (1). 
(ii) DEDUCTION
FROM
HOMEOWNER 
SHARE.—At the option of the investor, the 
cost of an appraisal or other determination 
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of value under paragraph (1) may be 
added to the amount paid by the home-
owner to the investor under subsection 
(c)(4). 
(B) REASONABLENESS
OF
COST.—The 
cost of an appraisal or other determination of 
value under paragraph (1) shall be reasonable, 
as determined by the Director and the Federal 
Housing Commissioner. 
(4) SECOND APPRAISAL.—At the time of refi-
nancing or sale of real property securing a covered 
mortgage, the investor may request a second ap-
praisal of the value of the real property, at the ex-
pense of the investor, by a licensed appraiser who is 
independent of and does not otherwise do business 
with the homeowner, servicer, investor, or an affil-
iate of the homeowner, servicer, or investor, if the 
investor believes that the sale price or claimed value 
at the time of the refinancing is not an accurate re-
flection of the fair market value of the real property. 
(e) 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 
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modification if, after the homeowner begins participating 
in the pilot program, the homeowner— 
(1)(A) is delinquent on more than 3 payments 
under the shared appreciation mortgage modification 
during any of the 3 successive 1-year periods begin-
ning on the date on which the shared appreciation 
mortgage modification is made; and 
(B) fails to be current with all payments de-
scribed in paragraph (1) before the end of each 1- 
year period described in paragraph (1); or 
(2) obtains a mortgage, loan, or credit, or in-
curs any other debt, that creates any additional lien 
on the residence that is subject to the covered mort-
gage for which the shared appreciation mortgage 
modification or for which such residence is used as 
collateral. 
The Director shall require, as a condition for participation 
in a pilot program by a homeowner, that the homeowner 
enter into such agreements as the Director considers nec-
essary to ensure compliance with this subsection. 
(f) NOTIFICATION.— 
(1) IN GENERAL.—Each pilot program shall re-
quire that the servicer of a covered mortgage trans-
mit to each homeowner participating in the pilot 
program written notice, in clear and simple lan-
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guage, of how to maintain and submit any docu-
mentation of capital improvements that is necessary 
to ensure that the shares of any increase in the 
value of the real property securing the covered mort-
gage to which the investor and the homeowner are 
entitled are determined accurately. 
(2) TIMING.—The pilot program shall require 
that a servicer provide the notice described in para-
graph (1)— 
(A) before the homeowner accepts a shared 
appreciation mortgage modification; and 
(B) before the homeowner sells or refi-
nances the real property securing the covered 
mortgage. 
(g) PARTICIPATION BY SERVICERS.—The Director 
shall require each enterprise to require that any servicer 
of a covered mortgage in which the enterprise is an inves-
tor participate in the pilot program of the Federal Hous-
ing Finance Agency by offering shared appreciation mort-
gage modifications to a random and statistically signifi-
cant sampling of homeowners with covered mortgages. 
(h) MORTGAGE INSURANCE.—The Director shall— 
(1) provide that an enterprise may negotiate re-
garding a shared appreciation mortgage modification 
of a covered mortgage with any provider of mortgage 
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insurance for a mortgage on the property subject to 
the covered mortgage; and 
(2) allow advance claim agreements with re-
spect to such mortgage insurance policies. 
(i) MAINTENANCE OF LIEN STATUS.—A shared ap-
preciation 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 mortgage. 
(j) STUDIES AND REPORTS.—The Director and the 
Federal Housing Commissioner shall— 
(1) conduct annual studies of the pilot pro-
grams of the Federal Housing Finance Agency and 
the Federal Housing Administration, respectively; 
and 
(2) submit a report to the Congress containing 
the results of each study at the end of each of the 
3 successive 1-year periods beginning on the date on 
which the pilot program is established. 
(k) TERMINATION.—On and after the date that is 2 
years after the date of enactment of this Act, the Director 
and the Federal Housing Commissioner may not enter 
into any agreement under the pilot program with respect 
to a shared appreciation mortgage modification. 
Æ 
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