Homeowners to Be Rewarded for Making Mortgage Payments

July 11, 2011 No Comments »

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As if falling into foreclosure wasn’t incentive enough to keep up on mortgage payments, now mortgage insurer PMI Group has launched a pilot program that rewards those who simply pay their mortgage on time. Yes, you read that correctly.

The private mortgage insurance company is working with Loan Value Group LLC to offer the “Responsible Homeowner Reward,” which put simply, provides homeowners with cash rewards for staying current on their mortgage.

Sounds like a pretty good deal. Let’s find out more about it.

How the Responsible Homeowner Reward Works

Here’s how this new program works. The homeowner receives an initial RH Reward amount (unclear what that amount is) and continues to make full and timely mortgage payments.

As time goes on, additional money is added to the account for each month the homeowner maintains active status, meaning on-time payments.

Once the mortgage is paid in full, either when it’s sold, refinanced, or simply paid off, the homeowner is paid the entire RH Reward.

But if the homeowner becomes delinquent more than once in a 12-month period, they risk forfeiting the entire RH Reward.

It’s unclear which customers are being targeted, or how many, but it’s likely geared toward those who stand to lose the company money.

I’m not sure what other companies are working with LVG, but mortgage insurance companies clearly have to avoid mortgage payment default to ensure they aren’t on the hook for insuring high loan-to-value mortgages.

It is assumed that those eligible for the program are high-risk borrowers at risk of immediate strategic default.

And the rewards that they dole out via the program are probably calculated to save the company money over the alternative. So even though they’re giving money to homeowners, they could actually save a lot in the process.

There is no charge to borrowers to participate in the RH Reward program.

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