30 Day Freeze on Foreclosures Announced by Banks
Bank of America Corporation, Citigroup Inc and 4 other U.S. lenders announced steps to help borrowers in danger of foreclosure stay in their homes by offering a 30 day freeze on some foreclosures while loan modification are considered. The U.S. Housing and Urban Development Secretary Alphonso Jackson said that “Project Lifeline” would help stabilize communities experiencing mortgage defaults.
The banks stated that program would start with a letter to homeowners more than 90 days delinquent on payments and will lay out procedures for them to “pause” the foreclosure process. The homeowner has 10 days to respond to the notice to give additional financial information so the lender can weight out new payment options.
Subprime, Alt-A and prime borrowers are eligible for the 30 day freeze.
The banks participating are:
- JP Morgan
- Wells Fargo
- Washington Mutual
- Countrywide
- Bank of America
- Citigroup
These six banks make up about half of the U.S. mortgage market.
The Federal Reserve projects about 2 million homeowners will face higher mortgage rates over the next 2 years at the loans reset.
