Industry NewsMortgage

Six lenders throw seriously delinquent borrowers a lifeline

Loan mods promised as Congress weighs bankruptcy 'cram-downs'

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Six major lenders have agreed to work with seriously delinquent homeowners, putting foreclosure proceedings on hold for up to 30 days to offer some borrowers workout plans that would lead to formal loan modifications if they can make reduced loan payments for three months. Backers of the new initiative, Project Lifeline, say it goes beyond previous outreach efforts by lenders in that it targets borrowers who are already behind on their payments by 90 days or more and covers all types of loans, including, prime, alt-A, second-lien and home-equity loans. Participating Project Lifeline lenders -- Bank of America, Citigroup, Countrywide Financial Corp., Chase, Washington Mutual and Wells Fargo -- are sending letters to seriously delinquent borrowers. Borrowers who receive the letters must call their mortgage servicer within 10 days, agree to seek financial counseling, and provide updated financial information that can be used to draw up a workout plan. In cases where lende...