Washington The Bush administration and six large mortgage lenders unveiled a plan Tuesday to offer 30-day reprieves to some homeowners facing foreclosure.
The program, targeting homeowners 90 or more days late on payments, is the industry's latest attempt to untangle the mess caused by years of lax mortgage standards.
These homeowners will receive a letter offering a "pause" in the foreclosure process to try to work out a repayment schedule.
Delinquent borrowers have always had the option of calling their lender for help in advance of a foreclosure. But the foreclosure process typically continued during those talks. Under this plan, there would be a 30-day freeze in the process.
Unlike a government-endorsed rescue effort announced last year, the new program, called Project Lifeline, is not limited to subprime mortgages, home loans given to borrowers with weak credit. It also includes foreclosures triggered by home-equity loans, prime loans and second liens.
Modifications to loans would be made on a case-by-case basis, and not all eligible loans are expected to be salvageable, industry officials said.
Homeowners in bankruptcy protection will not be eligible for the program, which also excludes vacant and investment properties. The offer also will not apply to borrowers whose homes are scheduled for a foreclosure sale within 30 days.
"None of these efforts are a silver bullet that will undo the excesses of the past years," said Treasury Secretary Henry Paulson. For example, the program won't help borrowers who put down little or no money and who don't want to continue to live in the house, he said.
Countrywide Financial, Bank of America, Citigroup, J.P. Morgan Chase, Washington Mutual and Wells Fargo are participating in Project Lifeline. They are also members of the Hope Now Alliance, the industry-financed nonprofit group that has been coordinating efforts to reach struggling subprime mortgage borrowers.