SOURCE: RH Reward

RH Reward

June 14, 2010 10:42 ET

Dear RHReward.com: Underwater Borrowers Tell Us Their Stories

RUMSON, NJ--(Marketwire - June 14, 2010) -  The internet is a great tool for communicating people's stories. So when underwater homeowners visit RHReward.com for information about the options available to them, they often tell us a little bit about their own circumstances -- and a lot about the problem they share with millions of other American consumers.

RHReward.com was created primarily to help borrowers understand the features of the Responsible Homeowner Reward, a unique program which aims to give responsible homeowners an alternative to strategic default, and the number of hits to the site grows daily. This site is designed to inform the borrower that there is an alternative to strategic default; and to inform the banks and lenders that there truly are homeowners looking for a path to a long-term solution that will keep them in their homes -- and keep them paying.

Here are their stories, as written in their own words on the "Contact Us" page of the RHReward.com website.

  • Jeffrey in New Canaan, CT bought his home for $1 million in May 2006 and estimates it is now worth $795,000. His combined mortgage debt after a second lien is $928,000, and he has never missed a payment. He writes: "Considering walking away, looking at other options."

  • Gregorio in Phoenix, AZ has been paying more than two times the monthly mortgage payment for the last five years on a house now valued at $200,000. He comments: "My house value is below the purchase price. Thanks for this program. It makes responsible people feel like less of a sucker."

  • Luz in Riverside, MD owns a house valued at $229,000 with combined mortgage debt of $326,000. She says: "We are responsible homeowners and borrowers, but the precipitous drop in the value of our home may leave us without a choice. It makes more sense for our family to walk away from our mortgage."

  • Shaun in Wyandotte, MI owns a house valued at $215,000 with combined mortgage debt of $315,000. He says: "Most of the programs out there reward default. In some cases, property values have fallen so much that borrowers like me with limited savings outside of retirements are better causing our own unemployment and filing bankruptcy to discharge our underwater homes then using after tax money to pay down tens of thousands in negative equity that grows each month. The good guys need a hand up. A program like this might do just that."

  • Jeremy in Idaho owns a house valued at $240,000 with combined mortgage debt of $305,000. He says: "If walk away from the house I will lose credit score points and self respect for years to come. I am hopeful there will be some creative financing options to help with these types of problems, whether it is your program or something else."

"Most of the homeowners we talk to are responsible people looking for help, who find themselves in an untenable situation," says RH Reward's Frank Pallotta. "Working with participating risk owners, we are often able to help eligible borrowers begin to repair their personal balance sheets and avoid the problems associated with default. It's important to point out that these borrowers are looking for help, not a bailout. A default -- strategic or otherwise -- helps no one."

Here's how RH Reward works:

  1. The eligible homeowner with negative equity is presented with an initial RH Reward amount.

  2. To keep their RH Reward status active, the homeowner makes their full and timely mortgage payments.

  3. For a fixed period of time following enrollment, an additional amount of money will be added to the initial RH Reward amount for each month the homeowner maintains active status.

  4. Once the mortgage balance is paid in full either by sale of home, refinance of home, or paying off the mortgage, the homeowner can withdraw the entire RH Reward amount.

Based on analysis from eligible borrowers, below is an overview of their inquiries:

  1. 23% of the borrower inquiries are from California, while 15% are from Florida.

  2. Average Borrower CLTV (current loan to value) is approximately 144%.

  3. Average Borrower first lien balance is $335,950.

  4. More than 2/3 of inquiries are from borrowers with an outstanding first and second lien.

Because RH Reward is a private-sector solution to address strategic default, no government or taxpayer money is being used to fund the program. The program starts with a simple agreement between the lender and the borrower, resulting in an alignment of interests of all parties.

About Loan Value Group LLC
Loan Value Group LLC, based in Rumson, NJ, is a solutions provider to owners of risk that directly addresses strategic default. LVG's incentive-based solutions allow mortgage owners and servicers to positively influence consumers by rewarding timely mortgage payments. LVG is the exclusive provider of the Responsible Homeowner Reward ("RH Reward"). Institutions can learn more by contacting Frank Pallotta or visiting Loan Value Group. Consumers can learn more by visiting RHReward.com.

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