With a staggering percentage of home owners behind or in foreclosure, the loan companies have a serious problem. Simply foreclosing all of the properties is not always the best solution, in fact, the mortgage company really doesn’t want to do this. It is an extremely expensive and painstaking process.
But on the other hand, if they just forgive part of the debt, reducing the home owner’s payment, without getting anything in return, the fear is that these people will tell their friends, and word will spread about all the “free money” the mortgage companies are willing to hand out.
Ocwen Financial Corp. of West Palm Beach, has created a solution for this problem. Their new “shared appreciation modification” program will reduce the payment on the struggling home owner, and in exchange, they get to participate in the appreciation on the home.
I think this is a great trade off, preserving the mortgage company’s interest, and helping the out of work and struggling home owner.
You can get the details of the program here.