Lenders Join Hands with Government for Foreclosure Freeze
Filed under: Foreclosure
Some of the big mortgage giants including Fannie Mae, HSBC Finance, JP Morgan Chase and Citigroup supported a move by US Treasury Department to clamp down a 30 day freeze hoping that this will allow those lagging behind in payments to make alternative plans. Hope Now Alliance was formed last year to stem the tide of growing foreclosures emanating from the sub-prime mess. Hope Now Alliance includes in its body more than 90% of those servicing sub-prime loans and 70% of all the mortgage servicers. They will take up the plan by 31st March.
Oliver Ireland, a spokesperson of Morrison & Foerster LLP opined that this was the right step to alleviate the agony of individuals going through the grind of foreclosures.
This latest move involving the government and lenders has been named Project Lifeline. Interest rate will be frozen for five years on some of the sub-prime mortgages – the Alt-A as well as some prime loans. It is hoped that many will benefit from this move. Those involved are Citigroup, Bank of America, Wells Fargo, Washington Mutual and Countrywide Financial. Fannie Mae is the largest provider of housing loan. HSBC is based in London.
The plan envisages sending out letters to those house owners who are more than 90 days behind in payments. The idea is to allow for a ‘pause’. The borrower will be given 10 days to answer to the letter after which the servicer will consider the options. Project Lifeline is another gesture like the one previously taken known as Hope Now. It targets those who struggled hard to make ends meet and repay the loan. On the other end of the scale are loans that just cannot be rescued. This fact has to be accepted.
Christine Sullivan representing Option One Mortgage Corporation says that they have a strong feeling of commitment towards helping those struggling to ward off foreclosures. Project Lifeline is being taken as another tool to be of assistance in this regard. Kate Durham of HSBC commented that since 2004 the company had such a programme running. It was part of a broad range of solutions aiming to allow for preservation of house ownership.
In the foreclosure fracas the blame is being squarely placed on the lenders for the crisis. As such they have to redeem their public image apart from the fact that they too are at the receiving end.
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October 8th, 2008 at 9:42 am
[...] houses. Bank foreclosures are meant for recovering losses incurred by payment defaults so lenders must rate the house accordingly and should sum up the unpaid loan amounts. The buyer [...]