Underwater Homeowners Program Launches Second Leg

By Kevin Chiu

A former Goldman Sachs banker, who launched an innovative company more than two years ago in an effort to save millions of house under foreclosure underwater homeowners from foreclosure, is expanding his firm’s program to include homeowners with second home mortgages.

The firm negotiates with underwater homeowners in an effort to reduce the number of mortgage holders who walk away from their upside down mortgages, and pays homeowners who keep up on mortgage payments cash rewards when their home is sold or refinanced.

Loan Value Group, based in Rumson, New Jersey has signed-up about 20,000 troubled homeowners for its program, which works with mortgage owners and mortgage servicing companies, including GMAC Mortgage and PMI two of the nation’s hardest hit financial firms.

Under the company’s new initiative, the Mortgage Accelerated Payment Program (MAPP), the mortgage holders lender matches “the borrower’s curtailment” by building a rewards account in the name of the borrower that can be paid in cash or applied as a credit towards paying down their debt.

Although lenders are seldom seeking deficiency judgments in cases of foreclosure, some state laws provide for legal judgments against homeowners who still owe outstanding debts after foreclosures or short sales.

The credit can also be applied to a home’s first lien or main mortgage. “Rewarding the underwater homeowner for making payments above the minimum amount due is a win for the consumer and  the loan owner,” said the group’s managing partner Frank Pallotta. “The more you pay, the more you get back.”

The firm’s traditional RH Reward program and the new plan reward homeowners for maintaining consistent timely payments, despite tough economic times in the midst of the worst foreclosure crisis in  U.S.  history. Loan Value Group is the creator of the program, which was named as one of the 50 best inventions of 2010 by Time magazine.