Mortgage Loan News: Project Lifeline
Toward the end of last year, when it became obvious that millions of foreclosures would be the result of the subprime mortgage crash, the Bush Administration suggested that mortgage lenders freeze interest rates for five years. Now, with foreclosures threatening on even higher-quality loans, a new policy is in effect. The New York Times reports on the details of this latest mortgage loan program, Project Lifeline:
Under Project Lifeline, banks are promising to delay foreclosure proceedings for 30 days for delinquent borrowers with both subprime and higher-quality loans. During the pause, the banks would presumably try to modify the loans to make them affordable over the long run.
One would hope that this would allow time for mortgage lenders and borrowers to work out alternatives to foreclosure. And while some homeowners will receive help from this measure, the combined benefit of the efforts to forestall foreclosures are unlikely to actually make a sizable dent in the problem.
Another thing to consider is that these cosmetic fixes do not address the underlying problems with the mortgage industry. Mortgage lenders have been too eager to give home loans to anyone, and borrowers have been too anxious to get more house than they may be able to afford. Stricter attention needs to be paid to the ability of the borrower to pay after a mortgage reset, and a greater emphasis should be placed on qualifying for higher-quality loans with reasonable fixed rates.
Tags: mortgage loan news, Project Lifeline, mortgage loan, subprime mortgage,
mortgage industry, mortgage interest rates, mortgage lenders
May 15th, 2008 at 4:34 pm
[…] with heavily touted "relief" programs like Project Lifeline, home foreclosures are still rising at a rapid pace. Bloomberg reports that filings for […]