Released: February 13, 2008

Lifeline for whom?

Source: New York Times (Free Registration)

When pressed by government officials, the mortgage industry has repeatedly pledged to modify the loans of at-risk borrowers. In May last year, Senator Christopher Dodd, chairman of the Senate Banking Committee, convened a group of major banks and loan servicers that promised to “create a permanent solution,” wherever possible, for troubled subprime borrowers. Then there was Hope Now, created last October and, now, as of Tuesday, Project Lifeline, both created at the urging of the Bush administration and both involving mortgage industry honchos promising to help hard-pressed borrowers. If the industry had kept the promises they made last May, the other two efforts might not have been needed. So it’s unclear why the administration continues to believe that urging the industry to do more is the most effective way to cope with the foreclosure crisis. The industry, for its part, has earned the skepticism that has greeted its serial promises.

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