How does the appreciation sharing work?
To encourage subordinate lien holders to participate in the negotiation process and release their liens, FHA has the authority to share with them the government’s portion of any future appreciation in the property’s value. At settlement, subordinate lien holders will receive a certificate that evidences their interest as an obligation backed by HUD, with payment conditional on the value of HUD’s appreciation share. Please see mortgagee letters 08-29 and 08-30 for more details.
