Foreclosure Aid Announced

Foreclosure-2 Project Lifeline, a joint venture between the Bush administration and 6 major lenders, will offer delinquent borrowers a grace period to rework loans.

A group of six major mortgage lenders will work with nonprofit groups to better connect with delinquent customers in an effort to prevent them from losing their homes, according to a joint announcement today by the lenders and the Bush administration.

As part of the program, borrowers who get behind on their payments will receive notice from a financial counseling service "instead of the big, bad bank," said an executive with one of the lenders. They will be given the opportunity to put the foreclosure process on pause for 30 days while the lenders try to work out a way to make the mortgage more affordable to the homeowner, according to the Associated Press.

The plan, dubbed Project Lifeline, was announced today by representatives of the Bush administration and the Hope Now coalition of lenders.

"Project Lifeline is a valuable response, literally a lifeline, for people on the brink of the final steps in foreclosure," said Housing and Urban Development Secretary Alphonso Jackson at a joint news conference with Treasury Secretary Henry Paulson.

Foreclosure typically begins at the 90-day delinquency mark, when borrowers receive a "notice of default" alerting them that they could lose their homes if they don't pay up.

The new outreach letters instead will offer delinquent borrowers a grace period in which to try to negotiate new loan terms with their lender.

"That's always our message: Be in contact with us," said a spokesman for another of the companies.

Mortgage lenders have been pummeled with complaints that they have been slow to