"Ocwen Financial Corporation OCN -0.15% , servicer of residential mortgages, has initiated a loan modification program designed to help distressed homeowners who owe more than their houses are worth and, at the same time, mitigate the likelihood of "rewarding" borrower delinquency.
Ocwen's Shared Appreciation Modification (SAM) program reduces delinquent customers' principal owed but also compels them to share some of the appreciation with the mortgage's owner (not the servicer) if the house increases in value by the time they sell or refinance it.
With a SAM, the principal of the loan is written down to 95% of the current market value of the home. The written-down portion is forgiven in one-third increments over the next three years, so long as the homeowner stays current on the modified mortgage. When the house is later sold or refinanced, the borrower must share 25% of the appreciation with the investors that own the loan; borrowers keep 75% of the gain"................READ MORE
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