Major banks support Obama's foreclosure plan

Ensuring full support to US President Barck Obama's $75-billion housing foreclosure plan, which commences on 4 March, Bank of America Corp (BofA) has announced the extension of moratorium on foreclosures on housing loans until the eligibility details of the homeowner affordability and stability plan are released.

Barck Obama, President, USBofA said it would temporarily cease the foreclosure on first mortgage loans until 6 March.

Meanwhile, Wells Fargo Home Mortgage, the nation's largest mortgage originator, has extended its foreclosure moratorium on loans it owns to 13 March. Last week, Citigroup and JP Morgan enacted temporary moratorium on new foreclosures.

''We support the administration's focus on affordability in the loan modification and refinance processes in order to achieve long-term mortgage sustainability for homeowners,'' says Barbara Desoer, president of Bank of America Mortgage, Home Equity and Insurance Services.

The Obama plan outlines how lenders should lower interest rates for homeowners who have become delinquent on their mortgages; it also boosts access to refinancing for homeowners who owe more than 80 per cent of their homes value.

Mike Heid, co-president of Wells Fargo Home Mortgage says that the refinancing will open up new opportunities for consumers. ''It's a very comprehensive, very thoughtful plan that will go a long way towards helping stabilise housing in America,'' he said.

The foreclosure plan is part of a broader $275-billion effort by the administration to help struggling homeowners. The $75 billion will reduce the monthly payments for borrowers, help homeowners with loans owned or backed by the state-owned Fannie Mae and Freddie Mac to refinance at lower rates, and provide incentives to the industry. The government is also committed to buy up to $200 billion of preferred stock in each of the two housing lenders.