The Treasury Department said yesterday that it has signed contracts with six major mortgage lenders to participate in the Obama administration's $75 billion foreclosure prevention effort.
Together, the lenders could be eligible for up to nearly $10 billion in incentive payments for helping troubled borrowers save their homes by agreeing to lower the payments to affordable levels. The administration has said the program, launched last month, could help as many as 4 million homeowners stay out of foreclosure.
The companies that have signed contracts to participate in the program are:
-- Chase Home Finance (a unit of J.P. Morgan Chase), which could receive up to $3.5 billion.
-- CitiMortgage (a unit of Citigroup), which could receive up to $2 billion.
-- Wells Fargo, which could receive up to $2.9 billion.
-- GMAC Mortgage, which could receive up to $633 million.
-- Saxon Mortgage Services, which could receive up to $407 million.
-- Select Portfolio Servicing, which could receive up to $376 million.
"We view this modification program as yet another incremental opportunity for thousands of homeowners to preserve and maintain the dream of homeownership," said Debora Blume, a Wells Fargo spokeswoman.
The six firms are the first of what government officials expect to be many lenders to join the program.
Consumer advocates and some academics have questioned whether the program goes far enough. For example, it does not include a prescription for borrowers who have lost their job or seen their home value plummet significantly, leaving them owing more on their mortgage than their home is worth.
