PNC Mortgage Corp. has introduced an unusual program to help people who have fallen behind on their mortgage payments.

The program enables urban borrowers who have missed several payments to refinance at a lower rate.

"I would say the program is unique," said Sheila Green, senior director of loan administration for the Mortgage Bankers Association. "Securitization did a lot to change the relationship with borrowers. The servicers have to follow strict guidelines about foreclosures."

But this program appears to be a major departure, she said. "I think if this program is successful, you're going to see a lot more of them ."

Special Cases

PNC Mortgage, based in Vernon Hills, Ill., took an idea from the state's Public Action Housing Policy Center and developed the program, which it calls Safe at Home.

It is limited to existing PNC Mortgage customers who have made a demonstrated effort to keep their homes and pay their mortgage, but because of events such as loss of income, divorce, natural disaster, or other unforeseen circumstances have been temporarily unable to make mortgage payments.

The program requires formal financial .counseling and a building inspection.

According to PNC, the program is beneficial to the investor as well as the borrower. "This approach is less expensive to us than the costs associated with foreclosure," said Walter C. Klein Jr. chairman and chief executive. "If a borrower has done everything he or she can to keep their home, we're going to help them by refinancing their mortgage loan at a lower rate."

Under the program being tested, PNC Mortgage joins with the borrower, the investor, and the insurer in making up delinquent payments, making up any shortage in escrow, and covering all costs of the transaction, including the financial counseling and home inspection.

Financial counseling includes a description of the transaction, development of a budget at the reduced mortgage payment amount, an assessment of the borrower's commitment to homeownership, and a summary of procedures in case the borrower again has difficulty meeting mortgage payments.

The building inspection is required to ensure that any serious defect or deferred maintenance is also identified and addressed.

Keeping Foreclosures Down

"This is an entirely new way of dealing with delinquencies and foreclosures," said Gale Cincotta, executive director of National Training and Information Center in Chicago.

Last year, PNC Mortgage funded $13.2 billion in residential mortgages, including $2.3 billion in FHA mortgaes, ranking it as the eight-largest originator. PNC has a servicing portfolio of about $35 billion.

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