A refi lifeline, with strings

Though it has hundreds of pages and dozens of separate initiatives -- including revamping federal oversight of mortgage giants Fannie Mae and Freddie Mac -- the centerpiece is a $300-billion HOPE program designed to provide refinancing lifelines to as many as 400,000 homeowners in deep trouble on their current loans.

But what are the specifics? Who will be able to qualify for help? How quickly will HOPE be up and running, and how long will it run? Are there any key drawbacks or limitations?

Here's a quick overview:

Congress' basic idea is to save people on the edge of the waterfall: families and individuals at immediate risk of losing their homes, but who could avoid foreclosure if their mortgage balances and interest rates were significantly reduced.

The program will be entirely voluntary -- and that's a crucial limitation. Lenders and investors who own defaulting mortgages cannot be compelled to allow their borrowers to refinance. If they conclude that they're likely to lose less by allowing delinquent borrowers to go to foreclosure rather than refinance into HOPE loans, they'll be free to do so, even if their borrowers want to participate and qualify.

Lenders will have to agree to substantial write-downs of principal and penalty fees currently owed to them. The new maximum HOPE loan amount -- insured by the Federal Housing Administration under a special new fund created by the legislation -- will be 90% of the current market value of the property, not the value of the house when the lender originally made the loan.

Plus, the FHA will impose an upfront insurance fee of 3% of the new loan amount, payable out of refinancing proceeds that would otherwise go to the original lender. Lenders also will have to clear away any potential issues with holders of second liens on properties -- typically banks who've extended equity credit lines or second mortgages and have a claim on any refinancing proceeds -- before participating in the HOPE plan.

There are important hurdles borrowers must get over to qualify as well. They must:

* Demonstrate a "lack of capacity" to pay their current mortgage but have enough income to make regular monthly payments on a smaller, fixed-rate FHA loan. Their current income-to-mortgage debt ratio must be above 35%.