"Project Lifeline" will be available to people with all types of mortgages, not just subprime loans. The plan targets homeowners who are 90 or more days overdue on their monthly mortgage payments. They will be given the opportunity to put the foreclosure process on hold for 30 days, while the lenders try to work out a way to make the mortgage more affordable.
"Project Lifeline has the potential to offer new solutions to responsible, able homeowners, who want to keep their homes," says Henry Paulson, Treasury Secretary.
Six of the nation's largest financial institutions are involved in the plan, covering about half of the nation's mortgages. The housing crisis is also a hot topic at the Federal Reserve Bank of San Francisco, where President and CEO, Janet Yellen, spoke this morning.
Janet Yellen will never be accused of sugarcoating her economic outlook, especially after the message she delivered at the Federal Reserve Bank of San Francisco on Tuesday. She says the economy is bad and going to get worse, but does not think we are in a recession.
"Current indicators point to continued anemic growth for at least the first half of this year, as well as significant downside risks, even to those weak expectations," says Yellen.
It would have been understandable if members of the San Francisco Planning and Urban Research Group went running for a headache or heartburn medication. However, the housing sector says Yellen is a huge problem, with housing permits and sales dropping and the foreclosure mess spreading to new victims.
"More recently, we've begun to see increases in foreclosures on subprime fixed rate mortgages and even on prime adjustable rate mortgages," says Yellen.
She also says the employment news is not good, with surveys showing growth down sharply, and actually falling in January and many other indicators pointing in the same direction.
But a recession? Despite a new poll showing most Americans feel we're already in one, she says we are not in a recession, although to many individuals, she understands their economy is in recession.
"Their inflation adjusted household income is probably falling when you take energy and food into account," says Yellen.
She calls the economy's prospects unusually uncertain. She says the Federal Reserve Board must be ready to act, meaning dropping interest rates even lower.
