Radian Guaranty Inc. said Tuesday it will begin offering "Loan Value Group" cash rewards to certain borrowers who recently modified their mortgage under the HAMP program in an effort to remain current.
But the money will only be provided if borrowers make full payments and on-time.
The mortgage insurance company said it would select eligible homeowners for enrollment and set up award accounts in their names that grow with each on-time payment, up to a maximum amount. These funds will be paid in cash, but only when the mortgage is refinanced or paid off.
Scott Theobald, Radian’s chief risk officer, said in a press statement that the company wants to support borrowers who modified their mortgages with the hope of keeping their homes.
Frank Pallotta, managing partner with Loan Value Group, said in a recent interview that there has been some interest from mortgage insurers in particular because “it establishes a connection with the consumer that up to this point mortgage insurers never had.”
He said the program not only allows MIs to make contact with borrowers without involving the servicer, but also gives them a way to head off delinquencies before they manifest with the servicer (generally when they are 60 days late or more).
Pallotta cited figures compiled by Wall Street researcher Laurie Goodman showing that as of the third quarter of 2009, the cure rate for loan 60 days delinquent was a meager 7%.
HAMP stands for Home Affordable Modification Program.
