U.S. Treasure Department's HOPE NOW

Temporary repayment plans

The HOPE NOW coalition includes companies such as Wells Fargo & Co., SunTrust Banks Inc., Countrywide Financial Corp., JP Morgan Chase & Co. and Litton Loan Servicing. Under the plan — which was announced in December and endorsed by the White House — lenders have agreed to freeze interest rates on certain troubled mortgages and help qualified borrowers into more affordable loans. With some 2 million loans to reset in the following year, government officials believe the plan will help stave off the growing number of foreclosures. 

The Los Angeles Times reported last week that while the coalition stated they have helped some 545,000 borrowers with delinquent subprime loans during the second half of 2007, compared with 386,000 in the first half of 2007, the majority of the actions were repayment plans. These repayment plans typically give borrowers more time to catch up on delinquent payments but does not help guide them into more affordable loans. Sheila Bair, chair of the Federal Deposit Insurance Corporation, recently told the Senate Banking Committee that 'temporary repayment plans will not provide stability to the borrower, investors, or the market.'

Tracking lenders

HOPE NOW describes the other actions taken as 'modifications' without explanation, The Times reported. The coalition releases only aggregate data, but the foreclosure crisis has stirred interest in the track records of individual lenders, which generally decline to provide such information to the public. Proponents of the plan argue that the data system they created was not set up to collect and retain the detail information consumer advocacy groups are seeking.

But when contacted by The Times, Wells Fargo, GMAC Residential Capital, Option One Mortgage Co. and Bank of America Corp. (which does not make subprime loans) declined to provide individual statistics on their efforts to modify troubled mortgages.

An exception was Calabasas-based Countrywide Financial, the nation's largest mortgage lender. Countrywide, which is being acquired by Bank of America, reported that in December it completed 13,273 loan workout plans — a 243% increase from 12 months earlier.

On Monday, Countrywide also announced an expanded program to further help troubled borrowers. The program was created by the mortgage lender in conjunction with the advocacy group, the Association of Community Organizations for Reform Now (ACORN).

The lack of data from lenders is stirring demands for new disclosure requirements. A bill by Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee, would require lenders to inform the Federal Reserve Board of their antiforeclosure efforts. Last month the California Assembly passed a bill that would impose a similar rule at the state level.

The IRS has a Web page that explains the potential tax implications for homeowners who lose their homes through foreclosure or engage in workout deals with lenders. For more information on Bush's HOPE NOW plan, call the toll-free foreclosure hotline at 1-888-995-HOPE.

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