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Treasury Announces Plan Aiding Holders of Second Mortgages

Posted on 28 Apr 2009

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The Obama administration unveiled a new program to help borrowers with second mortgages stay out of foreclosure while revising other government efforts aimed at helping homeowners pay off their loans.

The goal is to help homeowners gain aid with second liens such as home-equity loans, the Treasury Department said in a statement today from Washington. The new program will provide cash to mortgage servicers, investors and borrowers who modify the terms of a loan and keep pace with a new payment schedule.

“Ensuring that responsible homeowners can afford to stay in their homes is critical to stabilizing the housing market, which is in turn critical to stabilizing our financial system,” Treasury Secretary Timothy Geithner said in the statement.

The administration has offered a series of initiatives in an effort to stem the collapse in home values and the rise in foreclosures.

Mortgage delinquencies increased to a seasonally adjusted 7.88 percent of all loans in the fourth quarter, the highest in records going back to 1972, the Mortgage Bankers Association in Washington said March 2. Loans in foreclosure rose to 3.3 percent, up from 2.04 percent a year earlier.