Foreclosures Come To A Temporary Halt

February 19th, 2008 | Category: Foreclosure

People who are facing the risk of losing their homes to foreclosure are now going to be helped by the nation’s six largest lenders of mortgage loans. They gave in to pressure from the government in order to stem the flow of foreclosure and are now giving the defaulters a moment chance to repay their loans. The borrowers will be given an extension of 30 days during which the process of foreclosure will be paused and the lenders will additionally be working on a new scheme of repayment. that project, called Project Lifeline has been launched for defaulters who have not paid their mortgage for more than 90 days. These homeowners are on the verge of foreclosure and most of them have not yet contacted their lenders.

This project is not really a solution for the foreclosure crisis, but is more of a tool to keep the process on hold and give the lenders a chance to design a new plan of repayment. The Mortgage Bankers organization declares that around 1.3 million homes loans are facing foreclosure. The Secretary of the Treasury, Henry Paulson, while announcing that program, said that that was mainly an effort to help out those American families who want to retain their homes. However, he added that the worst was just beginning, as subprime mortgage holders would come up to reset the interest rates.

The mortgage servicers involved with that project are Bank of America Corp, Citigroup Inc, Washington Mutual Inc, JP Morgan Chase & Co., Countrywide Financial Corp. and Wells Fargo & Co and these constitute of 50 percent in the mortgage market. Paulson says that the project’s aim is to ensure that all the folks facing foreclosure will be alerted and they will ask for help without any delay. However, many public feel that that program is not suitable. James Carr, the chief operating officer, National Community Reinvestment Coalition says that the program thinks that most borrowers are not contacting the lenders and asking for help.

This is not true as there are citizens who are asking for help but are not getting it, as the lenders are too overwhelmed to do anything. Another issue is the decreasing home values. Just modifying a loan does not help the bigger problem of the loan being much more than the home value that has been updated. Thus, that program is just delaying the process of foreclosure, which is eventually going to be inevitable. public are still hoping that things will look up.