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Q&A: New help for some facing foreclosure BY SUSAN HARRIGAN, NewsdayFebruary 13, 2008 Some people in danger of losing their homes may receive new help through a program announced yesterday. Dubbed Project Lifeline, the White House-backed plan calls for six major lenders to voluntarily contact homeowners who are 90 days or more behind on their mortgage payments, and possibly grant a 30-day "pause" in the foreclosure process so a solution can be worked out. Newsday reporter Susan Harrigan talked with some experts about how the plan will work, and its chances for success. How is this different from earlier government-sponsored efforts to help troubled homeowners? Project Lifeline applies to people with all kinds of mortgages, second liens and home-equity loans instead of just to holders of subprime products. Why is the government pushing this? "It's an effort to forestall the foreclosure crisis" that is hurting the economy, said Alan Kral, managing director of Trevor, Stewart, Burton & Jacobsen Inc., a Manhattan money management firm. Besides helping owners, he said, the program would reduce the number of foreclosed houses that are entering the housing market and making the downward price spiral worse. Will it work? "It's just postponing the inevitable," Bob Moulton, president of Manhasset-based Americana Mortgage Group, said. Many people may take the 30-day reprieve from foreclosure, but sooner or later, they'll "just walk away," because falling home prices and upward resets in interest rates have made their mortgages "worth more than the house," Moulton said. What lenders are involved? For now, Bank of America Corp., Citigroup Inc., Countrywide Financial Corp., J.P. Morgan Chase & Co., Washington Mutual Inc., and Wells Fargo & Co. They account for almost half of U.S. mortgages. Is everyone eligible who is at least 90 days in arrears? No. You don't qualify if you're in bankruptcy proceedings or have a foreclosure date within 30 days. You also must want to keep your home, and the property in question can't be vacant or acquired as an investment. What do I do? If you qualify and your lender participates, you should get a letter from your mortgage servicer giving you a number to call within 10 days of the letter's receipt. Call and say you received a letter, you want to stay in your home, and you're willing to seek counseling, if necessary. Once you have provided updated financial information, any pending foreclosure may be delayed for up to 30 days "if appropriate" to see if a workout plan can be set up, according to program documents. If you follow the plan for three consecutive months, your loan will be formally modified. If you don't get a letter and you think you should, call the servicer. You also can call 1-888-995-HOPE, a number for a group of mortgage market participants backing the plan, and a counselor will help you get in touch.
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