WASHINGTON -President Barack Obama will release the details of his foreclosure prevention plan Wednesday, the White House announced yesterday, as several large banks pledged to temporarily stop foreclosures until the program is in place.
Obama will make the eagerly awaited announcement from Arizona, White House press secretary Robert Gibbs told reporters yesterday afternoon.
That schedule came as J.P. Morgan Chase, Bank of America and Citigroup announced temporary moratoriums on foreclosures at the urging of a key House member.
Top executives from these firms endured tough questioning before the House Financial Services Committee this week, including about whether the banks have done enough to help struggling homeowners. In public statements and letters to the committee released yesterday, the banking firms sought to show the extent of their efforts.
J.P. Morgan Chase said it would not begin the foreclosure process on any owner-occupied properties until March 6. "We believe three weeks is adequate time for the Treasury to announce - and for us to implement - a new plan," Jamie Dimon, Chase's chief executive, said in a letter to Rep. Barney Frank, a Massachusetts Democrat and the chairman of the committee.
Bank of America said it would consider extending its three-week moratorium if the loan modification plan is not complete by March 6.
Citigroup said its moratorium would last until Obama completes the details of the administration's loan modification program, or March 12, whichever is earlier. This fulfills a commitment Citi's chief executive, Vikram Pandit, made to the House Financial Services Committee on Wednesday. "Citi is taking the necessary steps to help American homeowners keep their homes," the company's statement said. Citi's moratorium went into effect Thursday.
The Office of Thrift Supervision, which regulates savings and loans, consumer advocates and Frank have all urged the industry to hold off on foreclosures until a new process for helping homeowners could be put in place.
Foreclosures were up 81 percent nationwide last year, with more than 3.1 million foreclosure filings. They're up 225 percent since 2006 - the final year of the boom before things began to unravel - according to RealtyTrac.
In addition, the median home price has tumbled nationwide. It stood at just over $180,000 in the last three months of 2008, versus $205,000 in the year-earlier period, according to the National Association of Realtors. For all of 2006, the final boom year, median home prices neared $222,000.
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."
McClatchy-Tribune contributed to this article.