I think the biggest disconnect is that Wall Street still looks at these mortgages as numbers. Whereas, we understand that we are dealing with individual homeowners, and we want to meet their needs,” says Mr. Correa.
Largo, FL (PRWEB) April 20, 2010
When the Obama Administration announced its support of principal reduction programs in March, Atlantic Mutual, LLC, had already been working on a private industry solution. Just one year ago, the Administration amended TARP to create a provision that makes such principal reduction programs possible. After almost one year of research, Atlantic Mutual launched a Principal Reduction Program in February that will access the Public-Private Investment Program (P-PIP) of TARP to facilitate their program. Sixty days into the program, Atlantic Mutual provides an update on the progress of their principal reduction approach and the details of why their Principal Reduction Program works.
Over the past two months, Atlantic Mutual has been rapidly expanding to collect files to fill the loan portfolios that they are putting together for their interested investors. The portfolios are lender-specific and designed to meet the desires of the end investors. “We’ve found a way to underwrite these portfolios of loans so that a qualified investor can choose the type of borrower that they want based on ability to pay and borrowing history, rather than using traditional underwriting procedures,” says Brian Correa, co-founder and CEO of Atlantic Mutual, LLC.
A Principal Reduction Program finally provides an alternative to the 18 million homeowners across the country buried in negative equity that have no other options. Loan modifications have proven to be unsuccessful, and lender principal reductions are far and few between (and that’s even if a borrower qualifies). Atlantic Mutual is at the forefront of the industry by developing a Principal Reduction Program that takes the proceeds from Wall Street and brings them to the people of Main Street. The American taxpayer can now benefit directly from the billions of dollars that have been poured into the corporate bailout.
The premise of Atlantic Mutual’s program may seem simple: the more portfolios that are purchased through this program directly translate into more mortgage principal reductions for struggling homeowners. However, the number of investors participating is limited. The P-PIP has only nine capital fund managers that can make purchases, and an interested investor must provide the adequate capital and be registered with one of these nine managers. Once qualified as an investor, the program utilizes federal government TARP money to help investment funds purchase huge bundles of toxic assets at a discount from the banks. The savings from the government-financed purchases allows those discounts to pass to homeowners by issuing new loans at, or below, current market value.
“The incentives in this program for all parties involved are structured in such a way that it’s not unrealistic to expect to see principal reductions completed for many qualified homeowners over the next few years,” explains Brooke Errett, co-founder and CFO of Atlantic Mutual, “but in order for that to happen, more legitimate enterprises will need to offer similar programs and more investors will need to step up to the plate. We also plan to continue raising bank participation through educating everyone on this process.”
Through their expansion, Atlantic Mutual, a residential financial consulting firm at the forefront of mortgage principal reductions, is building the infrastructure necessary to handle the huge influx of inquiries about its unique Principal Reduction Program. In fact, “(Ms. Errett) and I still take a few incoming calls per day to stay connected with the people that we are helping. I think the biggest disconnect is that Wall Street still looks at these mortgages as numbers. Whereas, we understand that we are dealing with individual homeowners, and we want to meet their needs,” says Mr. Correa.
The company encourages all homeowners to call to inquire about the details of their Principal Reduction Program. “We pride ourselves on the transparency of our company,” says Ms. Errett. “We want our clients to know that they can ask us questions about where we are with our files and what we do differently, and that they know they will get an honest, direct answer.”
As Atlantic Mutual’s Principal Reduction Program becomes increasingly popular, more and more homeowners, stuck in an upside-down mortgage, are becoming aware that they have options. At this point, everyone understands that it is simply a matter of getting the information out to homeowners. Luckily, principal reductions are getting more media coverage, and strong national advocates, like President Obama and Representative Barney Frank, help to give credibility to these programs.
“We’ve come to rely on the efforts of our Congressmen to make our program possible. (Atlantic Mutual’s) Principal Reduction Program works more efficiently with the more progressive initiatives that we see in Congress,” explains Ms. Errett. “I am excited about Representative Frank’s initiatives on secondary mortgages; encouraging lenders to work together only makes our job easier. I encourage all of our clients to reach out to their Congressmen to support such initiatives.”
But most homeowners do not know about principal reduction programs, and walking away looks like the only real option. Mr. Correa explains that “[t]hese are people that may have the resources to make their payments, but cannot see the sense in continuing to pour money into a hopeless investment.” The Principal Reduction Program developed by Atlantic Mutual was created to help precisely those people.
Unlike the multitude of programs out there only for default borrowers at risk of foreclosure, the Atlantic Mutual Principal Reduction Program offers that answer for homeowners who are up-to-date on their mortgage payments and currently ignored by public programs. In turn, their program addresses the concerns of opponents of principal reductions who think such programs will lead to an issue of moral hazard, where borrowers will default on their mortgages to qualify for the programs. Ms. Errett tells that “[m]oral hazard isn’t an issue with our program. We encourage our clients to stay up on their payments; in fact, we require it.”
Atlantic Mutual’s Principal Reduction Program not only requires that clients be on-time with their payments; clients must also have documentable income and meet a tight debt-to-income threshold. Fortunately for most borrowers, the company has other programs (like debt management) that can help borrowers to eliminate debt and qualify for the Principal Reduction Program.
When discussing the influx of principal reduction providers, Mr. Correa says, “I can’t speak for anyone else out there, but I do know we’ve been working around the clock developing a solution to this problem. Our Principal Reduction Program is based on a tight formula that brings taxpayer dollars back to the taxpayer…the American homeowner. In fact, our program is patent-pending. Sometimes it just takes a little private-industry enterprise to make a public program work. No one else does what we do the way we do it.”
The program provides a win-win situation for all involved. Banks win because they are able to unload their toxic paper without having to clean up foreclosure after foreclosure. Investors win because they are able to purchase at huge discounts. Homeowners win because they can finally get the relief they have sought after for so long.
And the taxpayer wins because the country is now in position to solve the mortgage crisis while actually using private industry instead of spilling out more government funds to do so. First glance says that this Principal Reduction Program is a winner.
For questions or inquiries, please contact info(at)atlantic-mutual(dot)com or call 888.850.6772. Or, go to Atlantic Mutual’s website at http://www.atlantic-mutual.com.
For media inquiries, please contact Brooke Errett at brooke(at)atlantic-mutual(dot)com.
Neither the Obama Administration or Representative Barney Frank have endorsed Atlantic Mutual, LLC. The references are merely to indicate their support of principal reductions.
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