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Principle Write Down, Fo' Reals?
Ocwen Financial Corp. is launching a new loan modification program called Shared Appreciation Modification. Underwater borrowers who qualify will have their principle reduced to 95% of market value. In return for remaining current on their new reduced payment program homeowners agree to "share" the home's future equity. The amount written down (the debt on the negative equity portion) is forgiven in one-third increments over the first 3 year period and when the house is later refinanced or sold the borrower will be required to share 25% of the appreciation with the investor. 

This program has been in trial mode since 2010 and experts are optimistic this may be the best course of action for banks to curtail large numbers of underwater and defaulting mortgages. An especially important move in the midst of more and more homeowners choosing to walk away because of negative equity. Time will tell if other banks will follow suit with similar programs. These days major banks and government loan modification programs success rates are at best laughable. Talk to anyone who has attemted to work with their bank. After months of hassle and heartache homeowner frustration is so high many feel like giving up and walking ... more

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