Mortgage Foreclosure & Refinance Resource

Project Lifeline, which allows extra time for lenders and borrowers to try to work out more affordable terms, was unveiled today.
The program would let qualified homeowners who are at least 90 days late on their mortgage payments pause the foreclosure process for 30 days to figure out a way to modify the mortgage.

“Project Lifeline is aimed at homeowners who face a real risk of losing their home and have not yet addressed the problem,” he told reporters. “Perhaps they are hoping to find a way to get current on their mortgage payments, or perhaps they don’t think any solution is possible. For whatever reason, they have not yet taken action. Our hope is that today’s announcement will reach them, and they will reach out immediately for help,” said Secretary of the Treasury Henry Paulson.

“Project Lifeline is a valuable response, literally a lifeline, for the people on the brink of the final steps of foreclosure,” added Secretary of Housing and Urban Development Alphonso Jackson.

The plan, described as a targeted outreach to the homeowners most at risk of losing their homes, initially will involve six of the largest mortgage lenders — Bank of America, Citigroup, Countrywide Financial, JPMorgan Chase, Washington Mutual and Wells Fargo.

Paulson emphasized that Project Lifeline was intended to help with all types of mortgages, not just the subprime loans that have been the focus of attention in the current troubled housing market. The plan builds on progress begun by theadministration’s Hope Now Alliance, which includes lenders, investors and nonprofits.

Approximately 425,000 homeowners are eligible to benefit from Project Lifeline, though in practice only a fraction of those borrowers will be helped, according to a Economy.com’ analysis of consumer credit files. More than 1.6 million mortgage holders defaulted on home loans in 2007, and at least that many are expected to default this year.

“If they reached all 425,000, they could have a measurable impact,” said Mark Zandi, the chief economist and co-founder of Economy.com. Projects like Project Lifeline are steps “in the right direction, but they are all very small steps. They are likely to be overwhelmed by the eroding housing and job markets. I am very skeptical these efforts will be successful in stopping what will be a record year.”

This information has been updated into our mortgage rescue wizard.