New plan to help slow foreclosure rates

February 12, 2008 9:12:02 AM PST
Project Lifeline will allow overdue homeowners to suspend foreclosures for 30 days while more affordable loans are worked out.

Six of the nation's largest lenders will take part in Project Lifeline. It allows homeowners behind in payments by three months, to avoid foreclosure by 30 days to come up with a more affordable payment plan. This is not just for anyone who has a loan that is sub-prime, it is for anyone that owns a home.

A new Zillow report out today says Bay Area homeowners could use some help. The Zillow report checks the value of all homes in an area, not just those that recently sold.

  • In the San Francisco-Oakland-Fremont area, it found home values down by more than 6.5 percent last year
  • Contra Costa County was down 15 percent
  • Alameda County was down 7 percent
  • San Mateo was down 3.2 percent
  • Santa Clara county was down 2.1 percent
  • Only San Francisco saw an increase in its median home price last year -- up 3.7 percent.

      The federal rescue plan coming out today involves six huge lenders, including Bank of America, Washington Mutual and Countrywide - the country's largest mortgage lender. Countrywide has already announced a partnership with the Association of Community Organizations for Reform Now, better known as ACORN.

      "To try and get them a fixed rate loan and try to help them be able to afford the loan," said Fannie Brown, ACORN.

      Other options include an interest rate freeze or five year delays on interest rate adjustments. Operation Lifeline, the federal plan being announced today, applies to all homeowners whose mortgage is 90 days or more past due. Consumer groups say much of this stuff has been tried, and doesn't work. These groups say only a total refinancing with a lower rate would be better.