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