This brings us to the Appreciating America Plan. It is a plan that should be adopted by all of the servicers, promoted to all of the ailing homeowners and supported by the US Government, especially the Federal Housing Administration. FHA has told me that the use of this solution would fit exactly within the current FHA guidelines. It is a fairly simple plan which can be utilized immediately in that it utilizes time-tested mortgage programs used in the commercial arena generally described as shared appreciation mortgages. I believe that this is what Chairman of the Federal Reserve, Ben Bernanke, was suggesting recently when he stated: "The fact that many troubled borrowers have little or no equity suggests that greater use of principal write downs or short payoffs, perhaps with shared appreciation features, would be in the best interest of both the borrowers and lenders." I couldn't agree more.

Appreciating America works as follows:

- Homeowner refinances outstanding mortgages with an approved "Appreciating America Lender" in accordance with established FHA guidelines regarding loan to value ("LTV") and debt to income ratios ("DTI"). The loan is fully supported by sufficient income, LTV limitations, and tied to past mortgage payment history.

- The Appreciating America Second mortgage is held by the current mortgage servicer and defers payments and interest. The homeowner and lender will share in the future appreciation of the home to pay off the Appreciating America second mortgage within five years.

- The new Appreciating America Second Mortgage is a subordinated second shared appreciation mortgage equal to the difference between the new FHA Mortgage and the existing mortgage(s). This second shared appreciation mortgage will accrue interest at 6%, with payments deferred, and will not be payable until 5 years after the loan is made (or the home is sold). At that time, the homeowner has a choice of refinancing the mortgage(s) or selling the home.

- To the extent that the value of the home at that point is greater than the FHA 1st mortgage amount ' the homeowner will first receive an amount equal to all capital improvements made to the property since the Appreciating America Mortgage closed, then the homeowner will receive 30% of the appreciation and the second mortgage holder will receive the lesser of 70% of the appreciation or the principal and accrued interest on the Appreciating America Second Mortgage. All appreciation in excess of the second mortgage balance including accrued interest shall belong to the homeowner.

The benefits of the Appreciating America plan are significant. Families will remain in their homes. With the promise of shared appreciation and protection of capital expenditures, the homeowner will be incentivized to maintain and improve the property. The existing lender/servicer will not to incur large losses in foreclosing or agreeing to a short sale in a dropping market. In fact, the servicer will receive the entire available proceeds from the new FHA mortgage as repayment on their original loan and may realize the remaining balance through future appreciation. Property values throughout the US should stabilize. Together, these benefits should have a palpable positive impact on the US economy while protecting from further property value erosion. At my company, Refinance.com, we are implementing the plan now.

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