PMI Group Rewards Homeowners for Paying Their Mortgages

PMI Group, a private mortgage insurer, is now rewarding homeowners with underwater mortgages (that is, more is owed on the mortgage than the property is actually worth) who pay on time, and not just by keeping a roof over their heads. Homeowner Reward, a subsidiary of PMI, has collaborated with Loan Value Group to create the Responsible Homeowner Reward, which awards cash bonuses to qualified homeowners who stay current on their mortgages.

The program is available in select markets where there is an abundance of underwater mortgages. Homeowners opt into the program at no cost, guaranteeing that they'll make their mortgage payment on time every month for a fixed period of time, typically between 36 and 60 months. During that period, rewards begin to accrue, and upon completion, assuming the homeowner has stayed current, they receive the money (between 10% and 30% of the unpaid principal balance).

This is the latest concept from Loan Value Group, who runs various programs intended "to positively influence consumer behavior on behalf of residential mortgage owners and servicers." (LoanValueGroup.com.)

Already available in 38 states, the Responsible Homeowner Reward pilot program is showing its impact. Early numbers showed that fewer than 10% of borrowers in the RHR program have defaulted; that compared to a redefault rate of greater than 20% with other loan-modification programs. One thing is for sure, there will be no shortage of homeowners able to join the program. There are approximately 13 million underwater mortagages in the United States alone.