Borrowers To Be Paid To Pay Their Mortgage

I don’t know how effective this will be because the borrower doesn’t get the cash incentive upfront.  They get it once the mortgage is paid off.  The purpose behind the program is to curtail borrowers from strategically falling behind on their mortgage. 

“Here’s how the program works: The mortgage investor (possibly joining with other risk holders, such as mortgage insurers or second-mortgage holders) offers a cash reward to borrowers if they agree to keep paying their mortgage. The incentive amount varies by borrower depending on income, negative equity, geography and other risk factors—those who are more likely to cause steep losses receive a bigger carrot. The “responsible homeowner reward” grows for up to five years as the borrower makes monthly mortgage payments.” 

Again, I feel you either need to do a principle reduction or a short sale if you are going to try to do anything improve it.  I don’t think this program is enough to entice someone especially since people still don’t understand anything about financial responsibility.  More and more people feel that is the case but the biggest problem is the individuals who aren’t behind will stop paying. 

“As the mortgage crisis drags on, some activists and investors have formed a loose coalition to prod banks into sharply cutting the amounts owed by borrowers whose loans far exceed the depressed values of their homes. Principal reductions are the best incentive for such borrowers to keep making monthly mortgage payments, some activists and investors say.”