Mortgage Giants And Plans To Halt Foreclosures

Posted in Foreclosure, February 13th, 2008 |

Some mortgage lenders – the top six giants – are about to disclose plans to locate the borrowers who are seriously at risk so as to put a brake on foreclosures while the loan will be rescheduled and other alternatives worked out. The lenders will work in tandem under the operation termed Project Lifeline. Those who have crossed the 90 days line of mortgage dues will be identified and foreclosures stalled till matters got resolved.

US Treasury Secretary Henry Paulson will be working with Washington Mutual Inc, Bank of America Corp., Wells Fargo, JP Morgan Chase, Citigroup and Countrywide Financial. The plan fits in with other foreclosure prevention measures that are already in operation. It will give more assurance to the borrowers that they can avoid foreclosures even if lagging behind in payments.
Lenders are not anticipating a bail out but in all probability a reasonable period of forbearance will be offered. Lenders will then be able to assess if the borrower can manage to pull along at all or not. The plan focuses on sub-prime mortgages.

Last December HOPE NOW introduced a rate freeze for those who could continue with present rates but would be unable if the rates increased as per the original loan agreement.
Today the lenders and the authorities are coming forward because the foreclosure drama has roped in all – lenders, borrowers, government and the community. A couple of years ago sub-prime loans were distributed to any and everybody without income checks. Some critics have compared this predatory lending to drug peddling. Gullible borrowers were tempted to unrealistic loans. The agents and investors benefited. There was a false housing boom. This raised prices which have now come down drastically. The result is that for delinquent borrowers there is no scope for refinancing as the value of the house today is less than the loan amount taken yesterday. Families are being evicted. Abandoned houses are attracting criminal activity and health problems. The authorities are not being able to collect taxes or revenue. The lenders are suffering from a cash crunch. Renters too are in a state of limbo as their lease agreement had been with house owners who are owners no more. The banks refuse to take the responsibility of renters. They want vacant houses that the can quickly sell off. Also affected are hundreds of pets left behind by fleeing residents! It is a heart rending scenario triggered by foreclosures.