Transcripts

"Project Lifeline" Reaches Out To Troubled Homeowners

PAUL KANGAS: The Treasury Department and some of the largest players in the lending industry today rolled out "Project Lifeline". It's a plan to help more homeowners avoid foreclosure. As Stephanie Dhue reports, the lenders -- all part of the Hope Now alliance -- are reaching out to borrowers who are in imminent danger of losing their homes.

STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: With mortgage defaults continuing to grow, Project Lifeline is the industry's latest effort to keep struggling borrowers from foreclosure. Treasury Secretary Henry Paulson says the plan applies to prime and sub-prime borrowers.

HENRY PAULSON, TREASURY SECRETARY: These efforts are to help American families who both want and can, through a loan modification or re- financing, stay in their homes.

DHUE: The six lenders -- Bank of America, Chase, Citi, Countrywide, Washington Mutual and Wells Fargo -- will begin mailing out letters to borrowers who are more than 90 days late with their payments. The banks will urge homeowners to contact their lenders to work out a loan. In some cases, foreclosure may be paused for up to 30 days to create a work-out plan. Economists say the small step is likely to be overwhelmed by plunging home values and a weakening job market. Consumer attorney Ira Reingold says there's a disconnect between the mortgage industry's rhetoric and reality.

IRA RHEINGOLD, NATIONAL ASSOCIATION OF CONSUMER ATTORNEYS: In some ways, what you're seeing is action by press release, so they keep announcing numbers and they keep saying things are getting better and they are doing more and our foreclosure crisis keeps getting deeper and deeper and deeper.

DHUE: Key lawmakers are also skeptical this latest plan will make much difference. Senate Banking Committee Chairman Chris Dodd says the government needs to more aggressively combat the problem. But Treasury Secretary Paulson rejects the idea of a more sweeping government role. He says the housing market has to work through a correction and the economy has to grow.

PAULSON: We made the decision, the president made the decision that we are going to focus on programs like this and in order to deal with the broader issue, we have a stimulus plan.

DHUE: Clearly, many lawmakers want to go further and are considering ideas ranging from giving first-time home buyers tax breaks to having the government buy out bad loans. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.