The incentive payments are part of a $75 billion “Homeowner Stability Initiative” plan unveiled by President Obama in February.
Participating loan servicers will receive an upfront fee of $1,000 for each completed loan modification, as well as incentives of up to $1,000 each year for three years if the borrower stays current on the new mortgage.
Additionally, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before a borrower becomes delinquent.
The Treasury has reportedly finalized agreements with six large mortgage servicers, including Chase Home Finance, Wells Fargo, CitiMortgage, GMAC Mortgage, Saxon Mortgage, and Select Portfolio Servicing.
Chase stands to take in more than one-third of the estimated $9.9 billion, with an allocation of $3.6 billion.
Wells Fargo has been allotted $2.87 billion, CitiMortgage $2.07 billion, GMAC $633 million, Saxon $407 million, and Select Portfolio $376 million; the figures are based on the companies’ business volumes.
Homeowners will also earn incentives of $1,000 per year for making on-time mortgage payments, for up to five years, which will go towards the principal balance of the mortgage.
I wonder how much money they’ll end up dishing out…