Incentive to be given for loan modifications

From among the 4 million homeowners who will face foreclosure proceedings this year, about half of those people had second mortgages.  To help those who took out a second mortgage, even without a down payment to buy a new house or to finance home improvements and other purchases, the government has released a new plan today that aims to provide cash incentives and subsidies to lenders who modify the loans.  In particular,

…the Treasury is offering lenders a $500 cash incentive for each second loan they modify and additional payments of $250 a year for three years if the borrower stays current.

Modifications need to see a sharp reduction in interest rates and some suggest, even the outstanding loan amounts.  The rate required would go down to 1%.

Source: New York Times

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