Servicers Announce Project Lifeline, Targeting Delinquent Borrowers

MBA (2/13/2008 ) Palaparty, Vijay
Mortgage servicers announced Project Lifeline yesterday, a new outreach effort and loss mitigation procedure that could pause foreclosures for delinquent borrowers more than 90 days overdue—primarily targeting borrowers willing to work with their servicer on loan modifications.
"This is another way that lenders are stepping up to help keep delinquent borrowers in their homes whenever possible,” said Kieran Quinn, CMB, chairman of the Mortgage Bankers Association. “One of the greatest challenges loan servicers face is convincing distressed borrowers that there is help available. The announcement, coupled with the letters that participants will send out, should help encourage delinquent borrowers to reach out to their servicer for help.”

Project Lifeline is a private sector effort by six servicers and is not only targeted toward subprime borrowers but all delinquent borrowers who are 90 days overdue on their mortgage payments. The servicers are Bank of America, Charlotte, N.C.; Citigroup Mortgage, St. Louis; Countrywide, Calabasas, Calif.; Washington Mutual, Seattle; Wells Fargo, Charlotte; and JP Morgan, New York.

“Project Lifeline is for those who face risk of losing their home but haven’t addressed the problem,” said Treasury Secretary Henry Paulson. “It’s a way to get borrowers current on their mortgage when they think a solution isn’t possible. Our hope is that they will reach out immediately for help as the foreclosure process is upon them. Of course, some borrowers will take no action and some will walk away from their homes, but Project Lifeline is a new program for responsible, able homeowners who want to keep their homes—able but struggling borrowers.”

The effort targets seriously delinquent homeowners and addresses the borrowers’ total financial situation—including the mortgage and other debt. It aims to increase transparency upfront to make them understand the steps required to get loan modification. While the loan modification may go through, the foreclosure is paused—time that could potentially make a large difference in avoiding foreclosure.

“By following the step-by-step process, delinquent borrowers can initiate the loan modification process and, if appropriate, the lender will initiate a temporary pause in any foreclosure proceedings,” Quinn said. “In the end, foreclosure helps no one—not the borrower, not the lender and not the community.”

“Achieving contact with borrowers about their available options is our biggest challenge,” said Floyd Robinson, president of consumer real estate and insurance services group at Bank of America. “We announce Project Lifeline, a targeted outreach effort to mainly those individuals who are 90 days or more late in making their mortgage payments. It’s targeted toward all loans including second liens and home equity loans. Servicers implementing this program are taking additional steps to reach out to homeowners to encourage them to reach out to their lenders. It’s a step-by-step approach to pause foreclosure while a modification is evaluated. It begins with reaching out to homeowners.”

HUD Secretary Alphonso Jackson expressed his support for Project Lifeline. “Homeowners are the beneficiary and are learning that information and communication can make a difference,” he said. “I am pleased to join Project Lifeline—it’s a powerful way to help homeowners in default who are facing foreclosure.”