By Mike Colpitts
As one of the U.S. most troubled mortgage lenders, GMAC Mortgage, once ranked as one of the top producing mortgage companies in the 
nation is offering troubled underwater homeowners cash bonuses in exchange for making mortgage payments on time. The program will be offered to a pilot group of military veterans to encourage them to avoid defaulting on their homes.
Loan Value Group, a New Jersey firm, creates an incentive without changing the terms of the original mortgage for homeowners they determine to be at risk of foreclosure. The company returns a portion of lost equity when a home is sold, refinanced or meets milestones.
The group has already launched a similar program with PMI Group, Inc., which was one of the nation’s largest mortgage insurers until the real estate crash. An estimated 6,000 PMI underwater mortgage holders are being offered the rewards program, which was started by a former Goldman Sachs Banker, with partners in an effort to get troubled homeowners to stay in their homes by offering financial incentives instead of being foreclosed.
The program will be offered to 4,000 military borrowers and their families who have obtained refinances through the Veterans Administration. “GMAC Mortgage is committed to preserving home ownership whenever possible and has been a leader in exploring and adopting programs to assist borrowers,” said Steve Abreu, president of GMAC Mortgage.
Taking part in the program is voluntary and there is no cost to the homeowner. The program has helped more than 10,000 homeowners in 40 U S states, mainly working with bank mortgage servicing companies to incentivize homeowners to keep paying their loans.
Almost 1 in 3 U.S. mortgages are either currently underwater or are within 5% of being in negative equity, according to Lender Processing Services, a real estate research firm that tracks mortgages for the lending industry.
The Responsible Homeowner Reward program (“RH Reward”) was first launched as a pilot program in 28 states and Washington, D.C., including the hardest-hit cities impacted by the foreclosure crisis. At the current rate of decline, more than 40% of all U.S. residential mortgages will be underwater within 18 months.