Relief from the subprime mortgage crisis – or at least the federal government’s latest attempt at it – has arrived in the form of a Bush administration proposal dubbed “Project Lifeline”.
In essence, what this program provides is allowance for homeowners more than 90 days in default on their mortgage payments extra time – 30 days to be precise – to renegotiate their mortgages, thereby avoiding foreclosure.
Unveiled yesterday, February 12, by U.S. Treasury Secretary Henry Paulson in a heavily covered joint press conference with HUD (Housing and Urban Development) Secretary Alphonso Jackson, the plan was initiated by six of the largest financial institutions in the nation who collectively service about half of the current mortgage market. Those six participating lenders being:
- Bank of America
- Citigroup
- Countrywide Financial
- JP Morgan Chase
- Washington Mutual
- Wells Fargo
Available to mortgagees with any type of mortgage – not just at-risk, subprime loans – the initiative is but one of the Bush administration’s many approaches to the current mortgage industry situation, others including a freeze on certain types of subprime loans.
Homeowners who may qualify for a reprieve from potential foreclosure with Project Lifeline will be sent notices by their lenders informing them of this new option and how to pursue it.
Not eligible for the program include homeowners who:
- already have a foreclosure scheduled within the next 30 days
- have filed for bankruptcy
- took out the mortgage in question to pay for a vacation home or an investment property
As of the close of the July-September 2007 quarter, approximately 1.3
million mortgages were either in foreclosure or seriously delinquent. Officials hope that Project Lifeline may go a long way towards ending the current housing slump. Will it work? Only time will tell.