Just yesterday, Countrywide Financial Corp. announced that it was partnering with the community advocate group, ACORN (Association of Community Organizations for Reform Now) to expand relief for its borrowers who are facing foreclosure. Today, the Bush administration followed up with its own foreclosure relief expansion plan — “Project Lifeline” — giving distressed homeowners an additional 30 days to work out more affordable payment options with their lenders.

If you need additional information about Project Lifeline, read the following information and consult your lender:

Project Lifeline Overview

• Members of the Hope Now Alliance are employing multiple strategies to help prevent avoidable foreclosures and continue to look for additional solutions to reach and help homeowners. Since the Alliance was formed last October, servicers, nonprofit counselors and investors have launched several programs to help homeowners struggling to make their mortgage payments.
• Project Lifeline is a targeted outreach to seriously delinquent homeowners (90 days or more late) that currently face the greatest risk of losing their home. Project Lifeline is encouraging homeowners to reach out to their mortgage servicer or counselor. It’s an effort to directly “pause” the foreclosure process, where appropriate, through a single call.
• Servicers have been aggressively reaching out to struggling homeowners in an attempt to find a work-out solution. Given the dynamic environment in the housing market–with declining home values, fluctuating interest rates, elevated housing inventory–aggressively targeting these seriously delinquent homeowners one more time is in everyone’s best interest (homeowners, servicers, investors and communities in which we all live.)
• Six HOPE NOW alliance members–Bank of America, Chase, Citigroup, Countrywide, Washington Mutual, and Wells Fargo–are participating in the launch of Project Lifeline. These servicers will begin the program by providing a letter to seriously delinquent homeowners nationwide giving homeowners a simple “step-by-step” approach that, if followed, may enable them to “pause” their foreclosure for 30 days while a potential loan modification is evaluated. All six banks will reach out to homeowners on a nationwide basis–with this step-by-step approach to finding a solution which meets their individual needs. This is different than the “streamlined” approach to loan modification announced previously. This is a broad, national approach to help all homeowners individually.
• The six lenders mentioned above–which collectively represent around 50% of mortgages–will soon
  begin to reach out to homeowners giving them a few simple steps that may qualify them for a loan modification:

1. Step 1: call your mortgage servicer.
2. Step 2: tell the servicer you have received the letter, you want to stay in your home and you are willing to seek counseling, if necessary.
3. Step 3: provide updated financial information so the servicer can explore an appropriate solution.
4. Step 4: if appropriate, any pending foreclosure may be “paused” for up to 30 days during this review process until a formal decision is made and, if possible, a plan is created.
5. Step 5: if a workout plan is established and the homeowner follows the plan for three consecutive months, their loan will be formally modified as they will have demonstrated their ability to meet the requirements.

• Hope Now will continue to work with other members of the Alliance to further expand the reach of Project Lifeline to all servicers.

Qualifying Loans

All 90-day delinquent loans, including subprime, Alt-A, prime, second liens and home equity loans, that are not:

• In active bankruptcy.
• In active foreclosure with sale date less than 30 days.
• Where the homeowner has indicated that they want to give up the home.
• Investment properties.
• Vacant properties.

Requirements for a Loan Modification

Homeowners must do the following to be evaluated for a loan modification:

• Call your servicer within ten days of receiving the notice.
• Tell your servicer that you have received the letter, you want to stay in your home and you are willing to seek counseling, if necessary.
• Provide updated financial information so the servicer can explore the appropriate solution.

If applicable, homeowners already in the foreclosure process will have the process “paused” for up to 30 days while they are evaluated for a loan modification.

Frequently Asked Questions (FAQ) — Project Lifeline

What is new about this Program?

Project Lifeline is a special effort focused on reaching homeowners who are 90-days or more delinquent but who want to stay in their homes; it seeks to let them know that their servicer is anxious to consider them for a modification. By also offering the homeowner a foreclosure “pause” where appropriate, the servicer is letting the homeowner know that they’re now serious about trying to find a loan modification that works, as well as giving both parties time to take action where a solution appears possible.

How does this program fit into the other HOPE NOW Alliance activities?

Project Lifeline is an additional program designed to reach all seriously delinquent homeowners who want to keep their homes. While the Fast Track program announced in December 2007 streamlines the loan modification process only for homeowners with subprime adjustable loans, Project Lifeline applies to any homeowner in any type of loan product. It’s one more way that HOPE NOW is developing solutions to help homeowners.

Specifically, it is a new program undertaken by six of the leading servicers that are part of the HOPE NOW Alliance. It will include not only subprime, but also Alt-A and prime loans as well. Additional HOPE NOW servicers are encouraged to adopt the program. Keep in mind that all HOPE NOW servicers are already actively employing existing programs such as homeowner outreach, support of the HOPE hotline, the HOPE NOW letter campaign, and employing the ASF fast-track framework for subprime resetting loans.

What exactly are Bank of America, Chase, Citigroup, Countrywide, Washington Mutual, and Wells Fargo committing to?

These servicers will begin by providing a letter to seriously delinquent homeowners giving homeowners a simple step-by-step approach that, if followed, may enable them to pause their foreclosure for 30 days while a potential modification is evaluated. Bank of America, Chase, Citigroup, Countrywide, Washington Mutual, and Wells Fargo will reach out to homeowners on a nationwide basis–with the step-by-step approach to finding a solution which meets their individual needs. This is a broad, national approach to help all homeowners individually.

What should homeowners do?

You should begin by calling your servicer and expressing your interest in keeping your home; the sooner you reach your servicer, the more options the servicer has in trying to find a solution. You should prepare for the call by gathering income and expense documentation that might be needed by the servicer to consider a potential modification.

Does Project Lifeline guarantee a loan modification?

No, it does not guarantee a loan modification, but where homeowners express an interest in keeping their homes, servicers will try their best to find an appropriate modification wherever possible.

Is Project Lifeline a foreclosure moratorium?

No, Project Lifeline is not a foreclosure moratorium, but it includes a case-by-case foreclosure pause where appropriate. Where foreclosure pauses are applied, it is both a win for the homeowner and the servicer, since it will be applied where the homeowner both indicates an interest in keeping the home and there is a reasonable prospect of finding an acceptable loan modification.

When will Project Lifeline begin–when will letters from Bank of America, Chase, Citigroup, Countrywide, Washington Mutual and Wells Fargo be mailed?

Bank of America, Chase, Citigroup, Countrywide, Washington Mutual, and Wells Fargo will begin mailing letters to targeted homeowners as soon as they are ready on an individual company basis. Outreach letters will be sent in waves to homeowners beginning, for some servicers, immediately.

How many homeowners will Project Lifeline help?

According to the federal government, Bank of America, Chase, Citigroup, Countrywide, Washington Mutual, and Wells Fargo are seeking to help as many homeowners as possible through the program. The number of homeowners who are at least 90 days delinquent is in the hundreds of thousands, so this program could potentially have a significant impact. Ultimate effectiveness will hinge in part on the response rate of homeowners calling their servicers and expressing interest in keeping their homes; since loan modifications also are done on a case-by-caseestimate a precise number of those who may be helped.

posted by Ralph R. Roberts, CRS, GRI    Author of Foreclosure Self-Defense For Dummies    Learn More Here

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