WASHINGTON Six of the largest U.S. mortgage
lenders on Tuesday will announce a program to identify
seriously delinquent borrowers and halt any foreclosure process
while they try to work out a new payment scheme, sources
familiar with the plan said on Monday.
The lenders will unite under the program, dubbed "Project
Lifeline," to identify borrowers more than 90 days delinquent
and stall any foreclosure proceedings while they try to develop
new loan terms, the sources told Reuters.
Executives from Washington Mutual Inc (WM.N), Bank of
America Corp (BAC.N), Wells Fargo & Co (WFC.N), JPMorgan Chase
& Co (JPM.N), Citigroup (C.N) and Countrywide Financial Corp
CFC.N are due to announce the plan on Tuesday morning with
U.S. Treasury Secretary Henry Paulson.
A source familiar with the plan said the initiative
dovetails with other foreclosure-prevention efforts already
under way at many lenders, but said it will give more
reassurance to troubled borrowers that they can avoid
foreclosure even if they are seriously late with payments.
Lenders do not imagine an open-ended freeze on foreclosure
proceedings but rather would offer a reasonable period of
forbearance so that lenders can determine if a borrower could
manage new loan terms, a source familiar with the plan said.
The plan is scheduled to be announced officially on Tuesday
morning at 11:15 a.m. EST by the bank executives, U.S. Treasury
Secretary, Henry Paulson, U.S. Secretary of Housing and Urban
Development, Alphonso Jackson, and Faith Schwartz, who heads a
government-industry foreclosure prevention effort called HOPE
In early December, the HOPE NOW program helped shepherd an
industry "rate freeze" plan that would hold interest rates in
place for troubled borrowers who can make initial mortgage
payments but would likely lose their home once rates rise under
the original loan terms.
The initiative to be announced Tuesday specifically targets
"subprime" loans that have recently seen a spike in