BLOG VIEW: Ahoy, Project Lifeline

Earlier this month, HUD Secretary Alphonso Jackson and Treasury Secretary Henry M. Paulson Jr. nodded approval of the latest strategy to combat rising foreclosure volumes. In standard sensational fashion, the private-enterprise initiative even has a catchy, mission-critical moniker: Project Lifeline.

Six major servicers – JP Morgan Chase, Bank of America, Citigroup, Washington Mutual, Wells Fargo and Countrywide – are at Project Lifeline's core. All members of the HOPE NOW alliance (representing more than two dozen servicers that administer more than 90% of all subprime loans and nearly 70% of all mortgages) followed suit and adopted Project Lifeline.

The plan, which Paulson described as a ‘targeted outreach to homeowners 90 days or more delinquent,’ mainly seeks to give certain borrowers a 30-day foreclosure moratorium.

‘We want homeowners facing foreclosure to take the urgently required first step and reach out to their servicer, or housing counselor, and get started on a recovery plan,’ commented Floyd Robinson, president of Bank of America's consumer real estate and insurance services group.

‘Project Lifeline represents a broad, national approach to looking at each homeowner's situation individually – making sure that we stop the clock on foreclosure long enough to complete the loan modification process in those cases where it's possible to do so,’ he added.

Paulson commented that ‘Project Lifeline has the potential to offer new solutions to responsible, able homeowners who want to keep their homes.’

I am not derelict in my duties as a journalist. I am not being intentionally ambiguous here. Quite simply, I cannot uncover more specific information related to Project Lifeline. I do not know what the ‘broad, national approach’ entails, nor can I tell you what ‘solutions’ are in the pipeline.

But let me try to break it down: Participating servicing organizations will make a pointed effort to identify seriously delinquent borrowers. If such a borrower is in foreclosure, and the borrower qualifies for a loan modification, the foreclosure action will be stopped for 30 days. In that time, the servicer will work out the loan.

Isn't all of the preceding nothing more than standard operating procedure for loss mitigation? What's new here?

Putting the brakes on foreclosure for 30 days seems to be the only new element – and a hollow one at that, given the huge foreclosure-timeline disparities from state to state and myriad investor requirements.

I am not belittling servicers' efforts. In fact, I staunchly support personal and private-sector responsibility for the current foreclosure environment (as opposed to a government bailout).

What I'm saying is that servicers are already doing – or should be doing – exactly what Project Lifeline is purporting as new and innovative. Attempting to find, contact and work with a seriously delinquent borrower is not a novel concept – no matter what the spin doctors say.

– Michael Bates, Servicing Management

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