Project Lifeline:
Help for homeowners who are behind with their mortgage payments?
Homeowners who had counted on being able to refinance their risky adjustable-rate mortgages before they reset to sharply higher rates have been caught in the sharp downturn of the real estate market as home sales and prices have plunged in many parts of the country.
Maybe help is coming soon.
The Bush administration announced Tuesday that Project Lifeline a coalition of the largest mortgage companies (lenders) will offer relief to homeowners currently behind with their payments for 90 days or more.
Project Lifeline intends to give the homeowners and lenders a thirty day pause so they can work out a new payment plan or some way to modify the loan, being able to modify a high risk loan will help thousands of homeowners now, and many more in the future. Will this project help minimize foreclosures in the near future? That is the million dollar question, but for sure the higher loan limits will allow more home-buyers access to conventional loans now at $730,000 max.
Read this paper by the Boston Federal reserve that provides the first rigorous assessment of the homeownership experiences of sub-prime borrowers.
Critics are already attacking this plan by saying it falls short of what is needed to solve the current problem that so many families face in this very turbulent financial market.
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