Project Lifeline has been announced, the latest idea to help those facing a mortgage they cannot afford.

Although the announcement of "Project Lifeline" was
couched in tones of optimism, officials cautioned that it is only an
incremental step that would not guarantee help for every homeowner
facing the loss of their home.

"No program can bring every struggling borrower into
the counseling and evaluation process, and we cannot help those who
choose not to honor their obligations," said Treasury Secretary Henry
Paulson. "None of these efforts are a silver bullet that will undo the
excesses of the past years."

The program is for U.S. families who want to and can
stay in their homes through a loan modification or refinancing, said
Mr. Paulson, adding that it isn’t meant to bail out real-estate
speculators or those who committed fraud during the mortgage process.

Project Lifeline will indeed help, but not as much as some would like:

The pilot program, dubbed Project Lifeline,
is supported by Treasury Secretary Henry Paulson and will further
encourage borrower contact as well as broaden Paulson’s moratorium
announced in December, 2007, which froze interest rates on certain
adjustable-rate mortgages, to include all kinds of home loans.
Homeowners won’t qualify for the 30-day-freeze if they are in
bankruptcy, if they already have a foreclosure date within 30 days or
if the loan was for an investment or vacant property.

There will still be many people who cannot stay in their homes even with the extra 30 days delay. This is about buying a little time for negotiations to go on, not a complete solution to the mess.

This new program called Project Lifeline is designed to assist all
borrowers, not just homeowners stuck in high-rate subprime loans. It
allows seriously overdue homeowners to suspend foreclosures for 30 days
while lenders try to work out more affordable loan programs for them.

All six of these companies are already involved in Hope Now, a program
assisting homeowners with high-cost subprime mortgages by freezing
their adjustable ´teaser´ interest rate for five years. Hope Now was a
key component in the Bush administration´s plan to help troubled
homeowners weather the foreclosure storm.

There will be some at the margin helped by Project Lifeline, but the question is, how many? Any and all speculators are already locked out of it: and as and when their properties get foreclosed then prices will fall: that’s the real problem, falling prices.

Treasury Secretary Henry Paulson and the banks offered a
30-day freeze on some foreclosures while loan modifications are
considered. Paulson and U.S. Housing and Urban Development
Secretary Alphonso Jackson said today at a news conference in
Washington that “Project Lifeline” would help stabilize
communities disrupted by mortgage defaults.   
       

“Project Lifeline has the potential to offer new solutions
to responsible, able homeowners who want to keep their homes,”
Paulson said. “As our economy works through this difficult
period, we will look for additional opportunities to try to
avoid preventable foreclosures.”   
       

In a statement, the banks said the program would start with
a letter to homeowners more than 90 days delinquent on payments
that lays out procedures for them to “pause” the foreclosure
process. The homeowner has 10 days to respond to the notice and
give additional financial information so the lender is able to
weigh new payment options.   
       

Subprime, Alt-A and prime borrowers are eligible, according
to the plan. Subprime mortgages are made to borrowers with poor
credit or high debt. Alt-A loans are sold to borrowers who want
atypical terms, such as proof of income waivers or investment-
property collateral, without sufficient compensating attributes,
such as larger down payments.

It simply doesn’t solve the jingle mail problem, nor the falling house prices themselves.

Here’s the video about Project Lifeline.

And a couple of wire reports: