Incentives. According to USA Today, the plan also includes incentives to encourage mortgage servicers ? who collect fees for refinanced and delinquent mortgages ? to work with qualified borrowers to modify loans. Servicers will get $1,000 for each eligible modification they make, and another $1,000 a year for three years as long as the homeowner remains current on payments. Homeowners who stay in their properties and are current will get a monthly balance reduction to help reduce their loan principal. That will amount to up to $1,000 a year for five years.
Also, banks would rather have you stay in your home ? even if they?re not making the full amount they signed up for ? rather than have the house go to foreclosure. They stand to lose more if you foreclosure than if your loan is modified.