Project Lifeline

[Moe]

[LEFT][B]Project Lifeline Press Release- [URL]http://www.treas.gov/press/releases/hp820.htm[/URL][/B][/LEFT]

[CENTER][B]Statement by Secretary Henry M. Paulson, Jr.
on New Private Sector Effort to Reach Homeowners Facing Foreclosure[/B][/CENTER]

[B]Washington, DC--[/B] Good morning. Thank you, Secretary Jackson, for joining us. We are going to provide an update on the HOPE NOW alliance's efforts to help struggling homeowners and – as Floyd Robinson of Bank of America, speaking on behalf of six leading mortgage servicers, will announce – an additional, important effort targeting those facing the greatest, immediate risk of losing their home.

When the HOPE NOW alliance was announced in October, we made clear that this would be an evolving private sector-led effort to help minimize the impact of the housing downturn on homeowners, neighborhoods and the U.S. economy. It is just one of many steps which the Bush Administration is encouraging as we work through this difficult period. Tomorrow, President Bush will also sign into law an economic growth package that will, through rebate payments to over 130 million Americans and tax incentives to businesses, provide a temporary, meaningful boost to our economy as we weather the housing correction.

Today, six of the largest servicers, who represent 50 percent of the mortgage market, are announcing Project Lifeline, a targeted outreach to homeowners' 90-days or more delinquent that may lead to a "pause" in the foreclosure process. This is an important new initiative, targeted to reach not only subprime borrowers, but all 90-day delinquent homeowners nationwide with a step-by-step approach to find individual solutions to individual problems. We encourage all HOPE NOW servicers to adopt this new program.

Project Lifeline is aimed at homeowners who face a real risk of losing their home, but have not yet addressed the problem. Perhaps they are hoping to find a way to get current on their mortgage payments, or perhaps they don't think any solution is possible. For whatever reason they have not yet taken action; our hope is that today's announcement will reach them, and they will reach out immediately for help – especially now that the foreclosure process is upon them.

Of course, there will be homeowners who still take no action, and some will simply walk away from their mortgage – particularly those borrowers who put little or no money down and whose mortgage exceeds their home value. No program can bring every struggling borrower into the counseling and evaluation process, and we cannot help those who choose not to honor their obligations. But Project Lifeline has the potential to offer new solutions to responsible, able homeowners who want to keep their homes.
Overall, the HOPE NOW alliance is striving to help as many able but struggling homeowners as possible – whether prime, alt-a or subprime borrowers. Clearly there is much more work to do, but progress has been made since the formation of HOPE NOW just over four months ago.
In those four months: [LIST][*]HOPE NOW membership has grown from 60 percent of the subprime mortgage servicer market to 94 percent; today, 25 servicers are represented.[*]The nationwide hotline (888-995-HOPE) has been publicized and expanded; daily call volume has increased from 625 to 4,000.[*]Servicers and investors are now providing funds for counseling; previously, only government and foundations provided funding.[*]In the first three months, HOPE NOW servicers sent 775,000 letters to at-risk homeowners; early results show a 16 percent response rate. Homeowners who had previously avoided contact are now calling for help, and over 200,000 additional letters are being sent every month.[*]Today, all HOPE NOW servicers are contacting subprime borrowers 120 days before their interest rate resets.[*]In the second half of 2007, the industry assisted an estimated 869,000 homeowners and, coincident with the formation of HOPE NOW, the loan modification rate in the fourth quarter doubled over the rate in the third quarter.[*]Secretary Jackson will also update us on FHA's progress in moving borrowers into affordable, long-term mortgages.[/LIST]These results are before implementation of the American Securitization Forum's (ASF) fast-track re-financing and loan modification framework. Servicers began implementing that plan in January after resolving a number of important issues, including receiving accounting guidance from the SEC on FAS 140 on January 8.

We have a lot of work ahead of us; these efforts can succeed only if they are pursued industry wide. I am particularly focused on two important steps.

First, I am eager to see the ASF framework and [B]Project Lifeline[/B] adopted by all servicers. If the ASF plan works the way it is intended to subprime borrowers who have made payments on-time at the initial rate and who want to stay in their homes but can't afford the higher rate should be fast-tracked into a modification – which in many cases will be an interest rate freeze of at least five years – or be fast-tracked into an affordable refinancing. Through Project Lifeline, those borrowers facing immediate foreclosure may be able to find individual solutions.

Second, I will be working closely with the HOPE NOW alliance on their plans for reporting progress. It is critical that they release monthly information, within 30 days of the end of the month, so that we can monitor progress and adapt as needed. Industry will be updating us throughout the month.

As I have said many times, the HOPE NOW alliance is an evolving effort. As our economy works through this difficult period, we will look for additional opportunities to try to avoid preventable foreclosures. However, none of these efforts are a silver bullet that will undo the excesses of the past years, nor are they designed to bail out real estate speculators or those who committed fraud during the mortgage process. These efforts are to help American families who both want to and can, through a loan modification or re-financing, stay in their homes.

I believe that our economy will continue to grow, although at a slower pace in the coming quarters, and that it remains fundamentally diverse and resilient.

I congratulate the HOPE NOW alliance for your flexibility and your hard work. You are helping our economy and our families, and you are also demonstrating the very resiliency which I spoke of a moment ago. Thank you.

[Moe]

[B] [URL="http://www.marketwatch.com/news/story/stop-foreclosure-lenders-agree-slow/story.aspx?guid=5445B9DA-C350-4C92-B7C2-1EBF88751EB0"]Project Lifeline News From Market Watch [/URL][/B]

[B]CHICAGO (MarketWatch) -- In the latest move aimed at halting a swelling and steady flow of mortgage foreclosures, six of the nation's largest mortgage lenders bowed to government pressure and joined forces Tuesday to give all homeowners who are seriously delinquent on their loans another chance.[/B]



The lenders have agreed to freeze foreclosures for a month to give borrowers and lenders time to work out a repayment plan.

Named Project Lifeline, the initiative is a step-by-step approach for homeowners who are 90 days or more behind in their mortgage payments, a circumstance that already puts them in serious risk of losing their homes. These borrowers - many of whom have not contacted their lender -- could begin receiving letters from them as soon as this week.

The program is not a solution to the housing crisis but is considered a "pause" in the foreclosure process, giving homeowners an extra 30 days to work out a payment or modification program. Some 1.3 million home loans are either seriously delinquent - meaning 90 days or more - or already in foreclosure, according to the Mortgage Bankers Association.

[B]'Project Lifeline is aimed at homeowners who face a real risk of losing their home but have not yet addressed the problem.' [/B]
[B]— Treasury Secretary Henry Paulson[/B]
"None of these efforts are a silver bullet that will undo the excesses of the past years nor are they designed to bail out real estate speculators or those who committed fraud," Treasury Secretary Henry Paulson said in announcing the program.

"These efforts are to help American families who both want to and can, through a [URL="http://www.loansafe.org"]loan modification [/URL]or refinancing, stay in their homes," he added

[URL="http://money.cnn.com/2008/02/12/real_estate/foreclosure_freeze/?postversion=2008021214"]More on Project Lifeline from CNN - [/URL]
[B][SIZE=3]Major lenders put freeze on foreclosures - [/SIZE][/B]

[B][SIZE=2]Banks will halt foreclosure proceedings to give lenders time to work out delinquency solutions. It's the latest attempt to tackle the housing crisis.[/SIZE][/B]

NEW YORK (CNNMoney.com) -- Six of the nation's largest mortgage lenders, in a joint effort to cool the raging foreclosure crisis, have agreed to temporarily stop foreclosure proceedings on homeowners who have fallen seriously behind in their house payments.

Under a program unveiled Tuesday, legal efforts to oust seriously delinquent borrowers from their homes will be postponed for 30 days while lenders and borrowers try to work out payment options.

The effort, known as [B]Project Lifeline[/B], will not be confined to borrowers with adjustable rate mortgages. So-called ARMs have recorded the highest rates of delinquencies, even as [URL="http://money.cnn.com/2008/01/29/real_estate/foreclosure_filings_2007/index.htm?postversion=2008012910"][COLOR=#003399]default for loans of all types[/COLOR][/URL] have risen dramatically over the past couple of years.

"For many families, Project Lifeline will temporarily pause the foreclosure process long enough to find a way out. Loan modifications may follow," said Alphonso Jackson, Secretary of Housing and Urban Development. "This program is not only available to subprime borrowers but to people with any kind of home mortgage."

The banks so far participating in the program are Citigroup ([URL="http://money.cnn.com/quote/quote.html?symb=C&source=story_quote_link"][COLOR=#003399]C[/COLOR][/URL], [URL="http://money.cnn.com/magazines/fortune/fortune500/2007/snapshots/309.html?source=story_f500_link"][COLOR=#003399]Fortune 500[/COLOR][/URL]), Countrywide ([URL="http://money.cnn.com/quote/quote.html?symb=CFC&source=story_quote_link"][COLOR=#003399]CFC[/COLOR][/URL], [URL="http://money.cnn.com/magazines/fortune/fortune500/2007/snapshots/372.html?source=story_f500_link"][COLOR=#003399]Fortune 500[/COLOR][/URL]), Bank of America ([URL="http://money.cnn.com/quote/quote.html?symb=BAC&source=story_quote_link"][COLOR=#003399]BAC[/COLOR][/URL], [URL="http://money.cnn.com/magazines/fortune/fortune500/2007/snapshots/164.html?source=story_f500_link"][COLOR=#003399]Fortune 500[/COLOR][/URL]), JPMorgan Chase ([URL="http://money.cnn.com/quote/quote.html?symb=JPM&source=story_quote_link"][COLOR=#003399]JPM[/COLOR][/URL], [URL="http://money.cnn.com/magazines/fortune/fortune500/2007/snapshots/1871.html?source=story_f500_link"][COLOR=#003399]Fortune 500[/COLOR][/URL]), Washington Mutual ([URL="http://money.cnn.com/quote/quote.html?symb=WM&source=story_quote_link"][COLOR=#003399]WM[/COLOR][/URL], [URL="http://money.cnn.com/magazines/fortune/fortune500/2007/snapshots/1554.html?source=story_f500_link"][COLOR=#003399]Fortune 500[/COLOR][/URL]) and Wells Fargo ([URL="http://money.cnn.com/quote/quote.html?symb=WFC&source=story_quote_link"][COLOR=#003399]WFC[/COLOR][/URL], [URL="http://money.cnn.com/magazines/fortune/fortune500/2007/snapshots/1561.html?source=story_f500_link"][COLOR=#003399]Fortune 500[/COLOR][/URL]).
Project Lifeline was put together with the backing of Jackson, Treasury Secretary Henry Paulson and Faith Schwartz, director of Hope Now, the government-backed, foreclosure prevention coalition.
Paulson said the effort won't be a magic bullet.

"There'll be homeowners who still take no action, and some will still walk away," Paulson said. "But some borrowers facing immediate foreclosures may find solutions."

[Moe]

Under the Project Lifeline program, homeowners 90 days or more behind in their mortgages will get a letter from their lenders asking them to call. Borrowers will be asked if they want to stay in their homes; if so, they will be offered financial counseling.

Loan modifications are not automatically granted. Borrowers will have to provide up-to-date information about their wages and debts. At that point, the lenders decide whether to pause the foreclosure process.
During the moratorium, foreclosure prevention specialists will determine if there's a good possibility that a loan modification will work. In other words, will a borrower be able to regain his footing and start paying his mortgage again?

Any loan modifications - such as lowering interest rates, balances or both - will be provisional. After homeowners make payments on time for three months, the changes to the terms of loans will become permanent.