6 Lenders Up Efforts To Aid Mortgage Mess

With mortgage defaults surging and politicians urging the industry to do more, six lenders agreed to widen their effort to help borrowers of all loans — not just subprime.

The plan, called Project Lifeline, is to be announced Tuesday by the Treasury Department and the Department of Housing and Urban Development, a person familiar with the plan said Monday evening, confirming earlier news reports and speaking on condition of anonymity because it had not yet been made public.

The plan will allow seriously overdue homeowners to suspend foreclosures for 30 days while lenders try to work out more affordable loans are worked out.

On a pilot basis, the plan will involve six of the largest mortgage lenders, in hopes that more lenders will sign on. The participants are Bank of America Corp., Citigroup Inc., Countrywide Financial Corp., JPMorgan Chase & Co., Washington Mutual Inc. and Wells Fargo & Co.

All six are involved in Hope Now, a Bush administration organized effort to freeze rates on some high-cost subprime mortgages for five years to aid borrowers whose teaser rates are jumping sharply higher. Since then, Treasury Secretary Henry Paulson has urged lenders to expand that effort to cover struggling homeowners with conventional mortgages.

The new plan applies to seriously delinquent homeowners, those whose mortgages are 90 days or more past due.

The Hope Now alliance, which includes lenders, investors and nonprofit groups, said last week that it helped nearly 8 percent of subprime borrowers in the second half of 2007 — more than its original estimate.

The group said it helped 545,000 subprime borrowers with spotty credit in the second half of last year, compared with its January estimate of 370,000. That works out to 7.7 percent of 7.1 million subprime loans outstanding as of September 2007.

Among the subprime borrowers aided, 150,000 were helped through permanent-loan modifications, such as lower interest rates, while 395,000 negotiated repayment plans, which often involve a borrower getting back on track even after missing a few payments.

Consumer groups, however, point out that many borrowers still can't keep up, even after loan workouts. They say many of the borrowers in the Hope Now effort have negotiated short-term loan modifications or repayment plans, which often involve a borrower getting back on track after missing a few payments. A full-fledged refinancing at a lower rate is preferable, they say.

[Michael Arnold]

This all about the banks best interests, not the homeowners.

Staying forever imprisoned to these way overpriced homes is the worst that can happen to ownners now. Subprime or "primetime". They''ll probably never be worth much more--ever.

But to each his own prison.

[dbenedum]

If you didnt care to read and understand your mortgage, arent you really avoiding reality to suite your whims and fantasys? Now if there is blatant preditory lending going on, that might be a different story, but bottom line is as Mom used to say, "If its too good to be true, it probably isnt". BTW what the heck does President Bush have to do with this? He didnt offer to sit in with me when I signed my mortgage, heck I didnt even call him and ask him his opinion.

[walt1944-2009]

It is disquieting that the companies offering the "lifeline" loans are the very same ones who started this mess and who could have prevented it before it happened.

I would really be VERY suspicious of a lender who stuck me with an ARM, then came up with a bailout plan for it! You know that the mortgage companies are going to make out on this scam, just like they did before and it will be all with the blessing of the Great Emperor Bush II and his neocon Fascist Nazi allies.

And for those of you out there who think it''s the borrowers fault for all this, when is the last time you bought a new car or applied for a credit card and actually sat down and read the fine print before you signed the agreement ? Did you run to a lawyer to interpret what you were getting into before you signed the dumb thing, that is, if the lending company let you take it to a lawyer before you signed? I''LL BET NOT!!!!!

SIG HEIL, BUSH!!!!

[dbenedum]

I completely agree with standlee5. I have a countrywide mortgage, subprime rate, but I was too smart to take an ARM, I insisted on fixed. So as I struggle to make payments and stay current, wheres my help? I guess I was too smart for my own good. I am too proud to fall behind on payments. Where is my bailout, where is my sympathy handout? Why do stupid people always need to be protected from themselves? People the mold reality to fit their whims and fantasys, should be taught to face reality as it is, not have it shielded by bailouts and government persuaded intervention.

[dee_b11]

what if you are curently in bankruptcy is there any help uot there for those people who have countrywide loans

[standlee5]

I''ve got a countrywide loan does that mean I get a break. I''ve sacrificed and saved for a down payment and watched the rates locking into a 30yr fixed before signing papers. What reward do I get. How about Congress giving responsible people a break every now and then. If you live in America and are responsible you''ll get the short end every time even though you''re the one paying taxes supporting lazy losers whims and fancy. They have a half dozen kids with different partners. No problem every household get a windfall EITC and they can all share in the bounty. They don''t pay for health insurance so when their kid breaks an arm. No problem our high premiums will pretty much cover it the rest will be covered by the local or state govt. (more of YOUR tax dollars) Don''t we all love supporting the losers of the country who somehow haven''t managed to participate in the largest economic boom in the history of mankind. No single momhood is honored even though it''s a guarantee of childhood poverty. Doesn''t matter. YOUR generous tax dollars will cover all. We need to revolt and stop paying taxes until congress can assure us their will be some accountability.

[dragonmouse-2009]

I don''t get it...where''s the reward for being one of those who actually PAYS your bills?

[ov442]

thats only because now they are in trouble. If they werent having huge financial difficulties, they''d be happily foreclosing on every house they could get their hands on.

Dont let them fool you.
Once they have recieved a number of years of payments, then begun receiving the Mortgage insurance payments, then take your home and resell it, they have made plenty of profit, and at the same time they have pushed more consumers into worse credit areas thereby creating a higher population of victimes of predatory lending for outrageous rates and fees and more penalties.
They make more money off poor people than they do rich people because rich people rarely finance anything and spend more time making money than spending it on loans and credit card interest.
Poor people are always stuck in bad loans, bad rates, bad situations and its a cycle, its near impossible to get out of it.

[slim1h2o]

Now they''re singing a different tune, from 3 yrs ago.
They''re almost sounding human, now a days.