Banks' foreclosure plan may help mortgage debt -S&P

NEW YORK, Feb 14 (Reuters) - A plan to halt foreclosure proceedings on defaulted homeowners may have a positive effect for the U.S. mortgage market and related bonds, Standard & Poor's said in a report on Thursday.

The "Project Lifeline" announced by six large banks this week is the broadest plan announced to date to ease terms on unaffordable mortgatges, S&P said. By keeping people in their homes, the plan may help reduce declines in home prices that create a downward spiral for U.S. housing, it said.

"Ultimately, any reduction in the depth and breadth of the current housing decline should translate into lower losses," S&P analysts wrote. (Reporting by Al Yoon; Editing by Theodore d'Afflisio)