More on Project Lifeline
"Bank of America Corp., Citigroup Inc. and four other U.S. lenders agreed with Treasury Secretary Henry Paulson to take new steps to help borrowers in danger of foreclosure stay in their homes.
"Paulson and the banks offered a 30-day freeze on some foreclosures while loan modifications are considered. The Treasury chief, with Housing and Urban Development Secretary Alphonso Jackson, said today at a news conference in Washington that "Project Lifeline'' would help stabilize communities disrupted by mortgage defaults.
"If someone is willing to make a call, to reach out, there's a chance they can save their home,'' Paulson said. "As our economy works through this difficult period, we will look for additional opportunities to try to avoid preventable foreclosures.''
"The program is designed to help a broad range of homeowners, not just subprime debtors who borrowed more than they could afford. Still, it won't help everyone, Paulson said. The U.S. housing correction "is not over'' and "the worst is just beginning'' for subprime borrowers who face higher interest rates in the next two years, he said.
"In a statement, the banks said the program would start with a letter to homeowners more than 90 days delinquent on payments that lays out procedures for them to "pause'' the foreclosure process. The homeowner has 10 days to respond to the notice and give additional financial information so the lender is able to weigh new payment options."
Here's more coverage from the AP. Here is the statement from Treasury Secretary Henry Paulson on the plan. Here is how the HOPE NOW alliance folks say it'll work (PDF link):
"The program will begin by servicers sending a letter to seriously delinquent homeowners. This program reaches all loans, Prime, Alt a, Subprime and second liens. The servicers will reach out to homeowners with the following straightforward steps that may qualify them for a loan modification:
1. Call your mortgage servicer
2. Tell the servicer you received a letter, you want to stay in your home and you are willing to seek counseling, if necessary
3. Provide updated financial information so the servicer can explore a suitable solution
4. If appropriate, any pending foreclosure will be ‘paused’ for up to 30 days during the review process until a formal decision is made and a plan is created
5. If a workout plan is established and the homeowner follows the plan for three consecutive months, their loan will be formally modified as they have demonstrated their ability to meet the requirements"