Government officials have said Obama's plan would establish industry standards for modifying the loans of troubled borrowers. And officials are considering a proposal to help distressed homeowners by subsidizing lenders who cut the interest rate on mortgages, according to sources familiar with the discussions.
So far, government and industry loan modification efforts have struggled to lessen the foreclosure problem. Many borrowers fall back into delinquency even after receiving help, including lower interest rates. Borrowers have complained that lenders remain difficult to reach and offer modification plans that are unaffordable.
The move by some lenders to "suspend foreclosure is helpful, and hopefully [the] sign of a trend that other lenders will follow," said John Taylor, president and chief executive of the National Community Reinvestment Coalition. However, "the move delays foreclosures but will not prevent them. The Treasury Department must move expediently to enact a meaningful foreclosure prevention program, or efforts to stall foreclosure will delay the inevitable but not provide real relief for homeowners and the economy."
