SOURCE: RH Reward

RH Reward

May 07, 2010 08:00 ET

RH Reward Offerings Top $86 Million -- Incentives to Eligible Homeowners in 45 States Seek to Encourage Them to Avoid Strategic Default on 'Underwater' Mortgages

RUMSON, NJ--(Marketwire - May 7, 2010) - Only four months after its launch, the Responsible Homeowner Reward ("RH Reward") program, offered through participating lenders by Loan Value Group, has offered over $86 million in rewards to eligible borrowers nationwide as an incentive to remain current on their mortgage payments. To date, RH Rewards have been offered in 45 states, the District of Columbia and Puerto Rico. The size of the reward is dependent on many factors, including the size of the mortgage, the amount of negative equity, and region of the country.

RH Reward addresses a serious problem for many homeowners, who find that factors outside their control -- particularly sharper lower housing prices in their cities and neighborhoods -- have left them owing more on their mortgages than their homes are currently worth. As a recent survey by the University of Chicago and Northwestern University suggests, about 31% of foreclosures in March 2010 were considered "strategic defaults," in which homeowners walk away when the value of a mortgage exceeds the house value -- even if they can afford the mortgage. That's up from 22% in March 2009.

RH Reward addresses this problem through an innovative, new incentive-based program that offers eligible homeowners a cash reward for simply staying current on their mortgage. Unlike government programs, eligible homeowners are recommended for RH Reward by the owners of their mortgages. Because there is no modification of the original mortgage note, enrollment in the program is simple and averages only 48 hours from initial borrower contact. In addition, easy, online enrollment does not require the borrower to submit additional documentation. Write-down of mortgage principal, with its adverse consequences for the borrower's credit score, is also not required. 

"Reaction to the RH Reward program has been tremendously positive from both borrowers and financial institutions," said RH Reward's Frank Pallotta. "Borrowers are grateful that their lending institution has proactively reached out to help them with a reward to continue making timely payments on their mortgage, and participating financial institutions say that borrower acceptance of this innovative new tool has exceeded their expectations."

Here's how RH Reward works:

  1. The 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.

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 RHReward.com
The Responsible Homeowner Reward is a unique program which aims to give responsible homeowners an alternative to strategic default. By providing a cash reward for timely mortgage payments, the RH Reward gives back to homeowners who are working to live up to their mortgage obligations. RHReward.com is an operating unit of Loan Value Group LLC. For more information, go to RHReward.com.

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