Lenders stop foreclosure proceedings temporarily
February 14, 2008
On Tuesday the nation’s six main mortgage lenders joined together to agree on a temporary stop on the ongoing foreclosure proceedings. The effort has been taken by the banks in an effort to calm the current crisis that has risen in the state because of these forced sales of homes. The temporarily freeze on foreclosures are to help those homeowners who have really fallen behind in their payback installments. The program which was launched on Tuesday has provisions which would entail the delinquent home owners, against whom legal steps of foreclosure have been taken, to get a reprimand of another 30 days. This period has been given so that the lenders as well as the people who borrowed the money will have some time to work out some repayment options.
The program has been named as Project Lifeline and this is not just for those borrowers who have taken Adjustable rate mortgages. The number of defaults on loans has been highest for these kinds of loans, and the general numbers of delinquencies on loans have also increased dramatically in the last few years. Project Lifeline has been created so that the families who are facing the risk of foreclosure will have some more time to figure a way out of the mess. Steps for modifications in the loan policies are another step the lenders might consider very shortly. However the lenders made it clear that Project Lifeline is not just for those people who have taken a sub prime loan but also for those people who have taken any kind of home mortgage loan.
Citigroup, Countrywide, Bank of America, JPMorgan Chase, Washington Mutual and the Wells Fargo are the six banks that have so far joined together to make the program a success and to help the suffering homeowners. The project has received the backing of the Jackson treasury and the foreclosure prevention coalition backed by the government, Hope Now.
The officials who are engaged in the implementation of the project said that this is not going to save each and every home owner as there will be still many out there who will not any action even now, and many others who will just walk away from the program. But they remained optimistic that at least those people who are facing the risk of an immediate foreclosure might be able to benefit from this plan.
The homeowners who are behind by 3 months in the repayment of their mortgages will get a letter from the lender asking the homeowner to call back. Once the homeowners do that they will be asked if they want to continue living in their home and if they want to they will be given financial counseling. The modifications in the loan are not granted at this time. Once the borrowers submit their current information regarding their wages and debts the lender makes the final decision on whether or not to freeze the foreclosure temporarily. The modifications are made only after the lender carefully studies the details that have been submitted by the borrower and confirms that the loan can be repaid by the person.
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