Bush To Put 30-Day Freeze On Foreclosures

In Effort To Combat Housing Slump, President Offers Relief Program To Qualified Homeowners

(CBS/AP)  The Bush administration, trying to deal with a worsening housing slump, announced a new initiative Tuesday aimed at helping homeowners about to lose their homes. For qualified homeowners, it will put the foreclosure process on hold for 30 days.

Dubbed "Project Lifeline," the new program will be available to people who have taken out all types of mortgages, not just the high-cost subprime loans that have been the focus on previous relief efforts.

The program was put together by six of the nation's largest financial institutions, which service almost 50 percent of the nation's mortgages.

These lenders say they will contact homeowners who are 90 or more days overdue on their monthly mortgage payments. They will be given the opportunity to put the foreclosure process on pause for 30 days while the lenders try to work out a way to make the mortgage more affordable to the homeowner.

"Project Lifeline is a valuable response, literally a lifeline, for people on the brink of the final steps in foreclosure," Housing and Urban Development Secretary Alphonso Jackson, said at a joint news conference with Treasury Secretary Henry Paulson.

He said the goal was to provide a temporary pause in the foreclosure process "long enough to find a way out" by allowing homeowners and lenders to negotiate a more affordable mortgage.

Paulson said that the new effort was just one of a number of approaches the administration was pursuing with the mortgage industry to deal with the country's worst housing slump in more than two decades.

It's really about protecting borrowers, it's about protecting neighborhoods. And it's also about protecting the housing market and the economy, ultimately," Sheila Bair, chairman of the FDIC, told CBS News.

In December, President Bush announced a deal brokered with the mortgage industry that will freeze certain subprime loans, those offered to borrowers with weak credit histories, for five years if the borrowers are unable to afford the higher monthly payments as those mortgages reset after being at lower introductory rates.

"As our economy works through this difficult period, we will look for additional opportunities to try to avoid preventable foreclosures," Paulson said. "However, none of these efforts are a silver bullet that will undo the excesses of the past years, nor are they designed to bail out real estate speculators or those who committed fraud during the mortgage process."

All six lending companies are currently 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, Paulson has urged lenders to expand that effort to cover struggling homeowners with conventional mortgages.

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.

[ianlou]

Washington hates when the middle class gets uppity and starts to torpedo the status quo.
Massive complaints about the diminishing standard of live from most Americans mean nothing until the string pullers start loosing money.

[grammawhamma]

I agree that the economy is in a big mess. Sending $600 to each taxpayer and telling them to spend it isn''t going to help. A thirty day freeze on forclosures won''t help. I don''t know what the solution is but I do think I know what caused part of the problem.

I see people today mostly living above their means. Did they ever hear of buying a "starter home" (a small but liveable "affordable" home)? Did they ever hear of buying a used car or even a new small economy car? Can they shop without using a credit card to buy things they think they need but don''t have the cash for?

Low income people have problems putting food on the table and gas in their old clunker cars to go to a minimum wage job. Those who are crying now that their $300,000 home is only worth $250,000 now have no sympathy from me!

[incog-nito]

Is this sort of like a 30-day reprieve for a death-row inmate?

[tibu987]

I guarantee that we will see many more of Bushes "too late" fixes as his miserable term of eight years comes to an end. This is the simplistic Bush way to make amends for what may go down in history as the the most out of touch, most poorly managed administration in America''s history.
I also expect that many more rats will be leaving this sinking ship in the next few months, trying to salvage their reputations.
Sorry guys and gals, it is too late.

[mcvet]

All you peeps defending this idiotic decision are probably the ignorant saps who have or have had mortgages way above your means...If anyone can''''t afford to live in the house they all on their own decided to purchase, then they should lose it...Period...End of story...Don''''t rely on the government to spoon feed you...


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Posted by DylanXXV at 05:15 PM : Feb 12, 2008
+ report abuse

I sit and read what these Nazi''s post and scratch my head. How can ANYONE live in this great nation and be so selfish and so without compassion. People were bombarded day after day with deal after deal from these financial company''s. They were sold a lot of hot air and now find it''s not possible to do what they lenders told them they could. What has happened to the America of My father? What has happened to the America of my Youth when people felt it was a duty to help those who stumbled? To help those in a bind? If we continue our march into fascism, I''m afraid, we are through as a nation. Sieg Heil Bush!

[skyk-2009]

My friends we are just about at the point of a total melt down of our economy and frankly the Incompetent Leader we have can not handle the problem. I''m very much afraid we may not be able to make it until a New President takes over. How in the world we ended up with this is something our grandchildren will scratch their heads about. The Failures are so many and so great it just boggles the mind.

[observantx]

What a limp and ineffectual response to the market conditions that are gnawing away at our economy.

I thought the insipid rebate plan was a nonstarter, but this is DOA.

I guess we need to slather these problems in crude oil, before they''ll get any real attention. The pungent smell of sweet light crude. THAT gets little Georgie''s gnat sized attention span working overtime.

[culturechang]

This just prolongs the inevitable. So they wait 30 days and a flood of foreclosures will go through.

All the rate cuts did not stop the stock market from dropping 300 points in one day.

Bush is using all his authority as President to keep the Republicans in good favor for the election.

[iphyt4u]

the banks and mortgage lenders are crooks. the bush administration will do everything they can to help these crooks. worst president ever. oh, by the way, we as americans spent 500 million dollars in iraq today. it''s the same amount we''ve spent everyday...for the last 5 years.

[singingrick]

The Bush Budget Deficit Death Spiral


Lenders talk about a %u201Cdebtor%u2019s death spiral.%u201D It occurs when borrowers get so far in over their heads they begin borrowing money just to cover the interest payments on past borrowings. The borrowers have to do this to keep the lending flowing but they can no longer plausibly pay down the principal. As new debt compounds on old, bankruptcy becomes imminent. Further lending is foolhardy. Foreclosure is only a matter of time.

The U.S. is starting to look like it is entering just such a death spiral. It is foretold not simply by the large and growing deficits, nor by the fact that their carrying costs will rise quickly as interest rates rise. Rather, it is the fact that these trends are becoming irreversible, a structural part of the U.S. economy.

[hsinco-2009]

Those of us that played by the "old" rules should feel little sympathy for those that decided to play by the "new" rules.

And those lenders that made the loans on the "new" rules should suffer their losses without a taxpayer bailout, which I am sure Bu$h is planning to his cronies.

Does Savings and Loan debacle in the 1980''s remind you of anything?

BTW- John McCain was involved with Charles Keating and was one of the Keating 7. Thief!!!!

[linfinster]

We balk at Government intrusion, but have lost so much of our basic dreams of personal freedom (to live in peace and quiet, self sustaining, healthy, bliss .. as an example) when the wealthy and the greedy have manipulated our "rights as humans" laws and regulations by making us question what is worth losing a right over or think that we are losing a right to do something, .. just to make more money. Our politicians are wealthy w/***** and we''re left without much more than the basic, generic life!

[irliberal]

A 30 day freeze accomplishes absolutely nothing. Another non-solution from a non-president.

[dylanxxv]

All you peeps defending this idiotic decision are probably the ignorant saps who have or have had mortgages way above your means...If anyone can''t afford to live in the house they all on their own decided to purchase, then they should lose it...Period...End of story...Don''t rely on the government to spoon feed you...

[tmittelstaed]

"Someone has to make these bad loans. Blaming the borrower is idiotic, since there are always going to be people who do not understand the loan nor how to manage money."

What about the people FUNDING these bad loans who were out there buying the "SIVS" and "other investment vehicles" I suppose they didn''t understand what they were buying either? Gee, according to you I guess everyone out there doesen''t understand money.

If people don''t understand loans or how to manage money then they are going to get screwed and end up with bad credit. They are going to end up declaring bankruptcy and then for the next decade they are going to be dealing with everyone on a cash basis, and will not be participating in the credit market.
So what? Where is the law that says that people with bad credit must be guarenteed a home loan? This will force them to learn how to manage money then they will do better when their credit finally clears.

Most people learn how to manage money when they are kids or later in school. For the ones that don''t, bankruptcy teaches them how to manage money. How is this *** them over? Are the creditors allowed to shoot people that default? Are they allowed to put these people in jail? Seems to me that the defaulting borrowers are the ones that get off scott free in this deal, and the only ones harmed are the lenders, and the investors funding the lenders, both of whom should have known better.

[tejasdemo]

What a joke. Who are these handouts going to anyway ?

I bet 7 out of 10 are going to rich investors who should be forced to pay these loans or dump the propoerty. Period.

[singingrick]

The truth is that these lenders engaged in predatory lending practices. Over 55% of the borrowers that were sold "subprime" loans qualified for standard mortgages. Lenders bumped up commissions to employees that steered customers to these slickly packaged variable rate ripoffs.

Ultimately these shady lenders knew that if they got in real trouble that the American tax payer would bail them out just as we did during the trillion dollar Savings and Loan crisis in the eighties. It''s just another way for them to rob the public. They lobby for deregulation and then take us all to the cleaners.

[fstop100]

This isn''t the governments problem. The lenders were handing out mortgages like candy. Let them pay the consequences. Anyway what is 30 days going to do?

[stanleyrice]

It''s really about protecting borrowers, it''s about protecting neighborhoods. And it''s also about protecting the housing market and the economy, ultimately," Sheila Bair, chairman of the FDIC, told CBS News.

I get a kick out of this! This is the same government saying they are protecting you now, who allowed the greedy mortgage and banking industry to run wild with little to no regulation, creating these "opportunities" for you too, to get into the housing world! (Even if you couldn''t afford it!). And they keep lying, cheating, and stealing, and you keep buying into it. Oh well, changing seats on the Titanic won''t do you any good.

[tmittelstaed]

Hey Jumkey, I understood our mortgage contract perfectly (likely my wife didn''t) when we bought our house because I spent the time in the lenders office to _completely_read_ through it before signing. A home purchase is one of the only gambles that an ordinary working man or typical middle class wage slave can take and have better than even odds it will work out to his or her advantage - the home mortgage industry is one of the things that makes the US a great country. Go watch the movie "It''s a wonderful life" and open your eyes. The only thing the vast majority of lenders ask is that you don''t borrow more than you can afford to pay back. The housing market provides all manner of houses in all price ranges - from low-price fixer-uppers to expensive palaces, you just need to spend a little time looking. For the vast majority of people, the gamble works out fine, they benefit, the banks benefit, everyone is happy and the country is strengthened. For the few people that it don''t, if they were careful and prudent going into the deal, they won''t be ruined for life. But it -is- a gamble after all - and the majority of folks who are losing their homes now, they didn''t look at it like this when they went into the deal.