New mortgage- help plan

by Zuzana Krskova

Treasury Department and the Department of Housing and Urban Development will announce plan called Project Lifeline on Tuesday. A new plan involving six big home lenders, is about to help at- risk borrowers with all types of mortgages, not just high- cost subprime loans.Seriously overdue homeowners will be allowed to suspend foreclosures for 30 days. During that time they should try to work out more affordable loan terms. The participants of this project are Bank of America Corp., Citigroup Inc., Countrywide Financial Corp., JPMorgan Chase & Co., Washington Mutual Inc. and Wells Fargo & Co. Producers of this plan hope, that those six large mortgage lenders will persuade more lenders to sign on. Project also includes investors and nonprofit groups.This new plan is used to seriously delinquent homeowners whose mortgage are 90 or more days past due.The fact is, that even some people with good credit have gotten behind on their payments, because of home prices falling. Borrowers signed up for adjustable- rate mortgages and those allowed them to make smaller, steady payments for several years until a higher fluctuating interest rate kicked in.Many homeowners now owe more than their home is worth. It's because the prices have plummeted. Some borrowed assumed, that they could sell or refinance their homes before higher payments began. But banks have tightened their lending practices, and left also people with stellar credit struggling with higher payments.The Hope New alliance helped nearly 8 percent of subprime borrowers in the second half of 2007, what represents †545,000 subprime borrowers with spotty credit. It is more than its original estimate.150,000 borrowers were helped through permanent- loan modifications, such as lower interest rates. 395,000 negotiated repayment plans. They often involve a borrower getting back on track even after missing a few payments.Even after loan workouts, there are still many borrowers unable to keep up. Preferable is a full- fledged refinancing at a lower rate.

by Zuzana Krskova for PocketNews (http://pocketnews.tv)

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Posted by: Maria Vidlickova