Lenders to help homeowners facing foreclosure
Six mortgage servicers announced on Tuesday along with the U.S. Department of the Treasury a program to stave off foreclosure for delinquent borrowers, in an attempt to address the housing industry downturn and subprime market meltdown.
Participating in the program, called Project Lifeline, are Calabasas, Calif.-based Countrywide Financial Corp. (NYSE: CFC), Charlotte, N.C.-based Bank of America Corp. (NYSE: BAC), New York-based Citigroup Inc. (NYSE: C), New York-based JPMorgan Chase & Co. (NYSE: JPM), Seattle-based Washington Mutual Inc. (NYSE: WM), and San Francisco-based Wells Fargo & Co. (NYSE: WFC).
The six companies participating in Project Lifeline represent 50 percent of the mortgage market, according to the Treasury Department.
Banks and lenders involved in Project Lifeline will contact homeowners who are at least 90 days delinquent with their mortgage payments. These borrowers may be able to freeze the foreclosure process for 30 days while loan-modification options are examined.
The program will target subprime borrowers, as well as all 90-day delinquent borrowers nationwide, to encourage them to respond to their mortgage servicer and pursue loan-modification options or refinancing.
Treasury Department officials said that Project Lifeline is intended to help families in the United States that want to stay in their homes through various options. Treasury Department officials said the program will not focus on bailing out investors who flip homes to make a profit.
In late 2006 and stretching into 2007, the housing market began to tank. More people, particularly those with spotty credit, started to default on their loans, and foreclosure rates climbed, as home prices fell, adjustable-rate mortgages reset and the economy soured. The residential real estate downturn has spilled over into the commercial real estate sector, while the overall economy continues to weaken.
"The foreclosure crisis is having a serious economic and social impact on communities across the United States," said Floyd Robinson, president of Bank of America's consumer real estate and insurance services group, in a statement.
"We want homeowners facing foreclosure to take the urgently required first step and reach out to their servicer, or housing counselor, and get started on a recovery plan," Robinson said.
Countrywide on Monday also announced a partnership with the Association of Community Organizations for Reform Now to help delinquent borrowers avoid forclosure.
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