Lifeline for US homeowners

(SUPPLIED)   

It was the latest effort by President George W Bush’s administration amid the housing-market crisis to help limit the number of foreclosures, which could have a knock-on economic impact.

The new programme, dubbed Project Lifeline, provides loan modification or refinancing and is aimed at “those facing the greatest immediate risk of losing their homes”. Paulson said at a news conference.

Paulson said the targeted outreach would apply to all homeowners 90 days or more delinquent on their mortgages, not just holders of sub-prime, or high-risk, mortgages at the centre of the credit crunch, unleashed last August.

Project Lifeline was developed by six members of the Hope Now Alliance, a mortgage-sector initiative launch­ed four months ago at the encouragement of the Bush administration to aid homeowners battered by a collapse in housing prices.

Paulson said the six mortgage lenders launching Project Lifeline represent about 50 per cent of the mortgage market: Bank of America, Citigroup, Countrywide Financial, JPMorgan Chase, Washington Mutual and Wells Fargo.

“We encourage all Hope Now servicers to adopt this new programme,” he said. “These efforts are to help American families who both want and can, through a loan modification or refinancing, stay in their home.”

In a separate statement, the Hope Now Alliance said that “hundreds of thousands” of homeowners are at least 90 days delinquent in their payments. Under the terms of Project Lifeline, those homeowners are urged to contact their mortgage lender. Any pending foreclosure will be “paused” for up to 30 days during a review process, the alliance said.

If a workout plan is determined and the homeowner follows it for three consecutive months, the mortgage loan would be modified.

The US housing market has been in a downturn since early 2006 following a multi-year boom. Falling home sales and property prices have triggered a spike in foreclosures as credit tightened and homeowners struggled to pay their mortgages.