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New guidelines and incentives announced Friday by the Obama administration are designed to encourage banks and investors to reduce principal for borrowers who are “underwater,” or owe more than what the house is worth.
The program, like the Obama loan modification program announced a year ago, is voluntary. About 10 percent of 3.4 million eligible borrowers are in a three-month trial modification program, according to a database kept by watchdog organization Pro Publica; about 4.9 percent have obtained a permanent modification.
Real estate agent Sebastian Frey of Thunderbird Real Estate in Capitola predicts the new federal guidelines will help some people in Santa Cruz County but probably not many.
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