The Responsible Homeowners Reward (RH Reward) program in New Jersey just celebrated its 4-month birthday by offering tens of millions of dollars to incentivize homeowners to make their mortgage payments rather than accepting a strategic default.

That’s right. They’re paying them to make their mortgage payments.

Of course, there is more to it than that.  Participating homeowners do see a rising balance from this program each month, but they can’t get at the money until they’ve paid off their mortgage balance or refinanced their home with a different lender. Also, your lender has to participate voluntarily and the amount of reward you are eligible for depends on a lot of factors, the size of your negative equity among them.

Not surprisingly, the reaction to this program has been pretty positive among homeowners. Perhaps more surprisingly, it has also been positive from lending institutions, who report that borrowers really like this program and are participating in higher numbers than expected.

Hmmm. I can get paid to do the right thing and make my mortgage payment?  I’m in too – absolutely!

On one hand, I’m glad that some of the banks in New Jersey, at least, have figured out a way to keep people from strategically defaulting. After all, the foreclosure volumes need to head down, not up. But I’m a little disconcerted that the solution involves paying people to honor a debt that they can afford to pay and for which they took a voluntary responsibility.

It’s weird in the real estate business… and seems to be getting weirder every day.

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