GMAC Mortgage LLC, Fort Washington, Pa., and Loan Value Group, Rumson, N.J., have partnered in an effort to provide cash incentive rewards to certain VA borrowers who are under water on their loans, make timely and consistent payments on their mortgages and meet other criteria.
GMAC said in a press release that the effort involves a voluntary pilot program for 4,000 military borrowers and their families who have obtained streamlined refinance mortgages guaranteed through the Veterans Administration.
The reward has “never been specifically applied to veterans before,” Frank Pallotta, executive vice president at LVG, told this publication. “This is the first time.”
Pallotta said also this is the first time the program has been applied to VA loans underlying Ginnie Mae securities.
The rewards program is a financial instrument separate and distinct from the mortgage note that does not violate the terms of any securitization agreement, Pallotta said. He said it also has been used in conjunction with underwater loans in agency securitizations.
VA borrowers are known for having relatively strong payment histories even though their loan-to-value ratios can be relatively high compared to the larger market.
