Lenders giving more borrowers a hand up

WASHINGTON — Six major lenders agreed to widen their efforts to help borrowers of all loans, not just subprime ones, and to allow seriously overdue homeowners to suspend foreclosures for 30 days while affordable loans are worked out.

The plan, Project Lifeline, is being announced today by the Treasury Department and the Department of Housing and Urban Development, a person familiar with the plan said Monday evening, confirming news reports and speaking on condition of anonymity because it had not yet been made public.

On a pilot basis, the plan will initially involve six of the largest mortgage lenders, in hopes that more will sign on.

The participants are Bank of America, Citigroup, Countrywide Financial, JPMorgan Chase, Washington Mutual and Wells Fargo.

All six are involved in the so-called Hope Now plan, a deal the Bush administration brokered late last year with the mortgage industry to freeze rates on some high-cost subprime mortgages for five years to aid borrowers whose introductory "teaser" rates are climbing.

Since then, Treasury Secretary Henry Paulson has urged lenders to expand that effort to cover struggling homeowners with conventional mortgages.

The new plan applies to homeowners whose mortgages are 90 days or more past due.

On Monday, Countrywide also rolled out a separate national program to help borrowers manage their mortgage payments regardless of the type of subprime loan they have or whether they are behind on payments.

Locally, Countrywide is working with the Washington Association of Community Organizations for Reform Now, or ACORN.

The nonprofit estimates there are about 1,200 Countrywide subprime-mortgage holders in the Seattle area that will benefit.

"We anticipate being able to save, not just houses, but whole neighborhoods as well," Jean Withers, the Northwest regional director for ACORN, said at a news conference.

ACORN has similar agreements in place with 28 other mortgage lenders, including WaMu.

The program's first participant is Burien resident Theresa DiMartino.

She was in danger of losing her house after her adjustable-rate mortgage reset in September to 8.99 percent, increasing her monthly mortgage payments from $1,442 to $2,390.

DiMartino, a client-services specialist for Public Health — Seattle & King County, put her house on the market but has been unable to sell because of the downturn.

As a result of the partnership between Countrywide and ACORN, she found out she can modify her loan to a 30-year-fixed mortgage at 5.2 percent.

"This is really helping the working class," said DiMartino, 47.

Sara Hasan, an equity analyst with McAdams Wright Ragen in Seattle, said Countrywide's decision to partner with ACORN will help the company's image.

"They're the big ugly right now in terms of the subprime market," said Hasan. "From a public-relations perspective, they needed to do something. From a financial perspective, it's tough to say if it's too little, too late."

Countrywide, the nation's largest mortgage lender and home-loan servicer, said last month it helped more than 81,000 borrowers keep their mortgage payments manageable in 2007.

Some 6.96 percent of the 9 million loans in Countrywide's servicing portfolio were delinquent as of Dec. 31, up from 5.02 percent in December 2006.

About 1.04 percent of the mortgage loans, or 93,961, were pending foreclosure, up from 0.65 percent.

The information about the local ACORN program was provided by freelancer Kirsten Grind.