Dubbed
”
Project Lifeline,
”
the plan includes lenders from six of the nation’s largest
financial companies and would put banks in contact with homeowners
who are 90 days or more overdue on their mortgage payments.
CURTIS CARTIER – SPECIAL TO THE FREE LANCE
HOLLISTER
President Bush recently introduced new legislation aimed at stemming the rising tide of home foreclosures around the nation. Real estate experts in San Benito county, however, say Bush’s plan is merely a “quick fix” and will do little for homeowners trapped in a stagnant economy and overwhelmed by housing costs.
Dubbed “Project Lifeline,” the plan includes lenders from six of the nation’s largest financial companies and would put banks in contact with homeowners who are 90 days or more overdue on their mortgage payments. The companies would offer the delinquent owners an extra 30 days to renegotiate with lenders and avoid a foreclosure.
“If people can’t pay their mortgage for 90 days, 30 more is not going to help,” said Dee Brown, real estate agent at RE/MAX Valley Properties. “What’s going to help is lenders actually renegotiating rates with owners.”
According to the Mortgage Bankers Association, 1.3 million home mortgage loans were either extremely delinquent or in the process of foreclosure at the end of the July-September quarter.
Democrats nationwide have been quick to criticize the plan, pointing out that 30 percent of homeowners who bought their homes within the last two years now owe more on their mortgages than their homes are worth.
“Homeowners at risk of foreclosure are floating 50 feet from shore while Project Lifeline throws them a 30-foot rope,” Sen. Dick Durbin, D-Ill, was quoted as saying in an Associated Press story Feb. 12. Durbin is pushing for legislation that would allow homeowners facing foreclosure to alter their mortgage contracts during bankruptcy hearings to make their payments more affordable.
The current national drought in housing is the worst crash in more than 20 years and comes after a recent five-year boom in which both housing costs and sales reached record levels.
“This program is just a Band-Aid,” said Marilyn Ferreira, associate broker with Intero Real Estate Services in Hollister. “The bottom line is, how are they going to pay back the bank? Adding 30 days is just prolonging the inevitable.”
For many conservatives, Project Lifeline is seen as an important first step in solving a major issue sweeping the nation. San Benito County Supervisor Jaime De La Cruz said the plan works as excellent short-term relief, while the long-term solution rests in improving the overall economy.
“Any time you can help a family keep their home for even one more day, it’s a step in the right direction,” De La Cruz said. “But in order to solve the problem we simply need more jobs and more job security.”
The six financial institutions participating in the program are Wells Fargo & Co., Bank of America Corp., Countrywide Financial Corp., J.P. Morgan Chase and Co., Citigroup Inc. and Washington Mutual Inc. Homeowners would not qualify for the moratorium if they have already declared bankruptcy, if the home was purchased as an investment property and is not currently occupied or if the foreclosure sales date is less than 30 days away.
Homeowners looking to take advantage of Project Lifeline are encouraged to call Hope Now Alliance, which represents the participating banks, at 1-888-995-HOPE.
