April 28, 2009

Treasury to tackle second liens

The U.S. Treasury Department said it would expand its mortgage modification program to include homeowners with second liens on their property.

Under the Home Affordable Modification Program, the Second Lien Program would pay banks a fee for helping homeowners renegotiate second mortgages, such as home equity loans, the Treasury said in an announcement.

Alternately, banks would have the option to extinguish the second lien in return for a lump sum payment under a preset formula, The Treasury said.

With these latest program details, we're offering even more opportunities for borrowers to make their homes more affordable under the administration's housing plan, said Treasury Secretary Tim Geithner.

Ensuring that responsible homeowners can afford to stay in their homes is critical to stabilizing the housing market, which is in turn critical to stabilizing our financial system overall, Geithner said.