Four of the nation’s biggest banks have announced a moratorium on foreclosures for the next few weeks while they await the details of President Obama’s $50 billion financial stability plan to stem foreclosures for homeowners, the Associated Press reports (“Obama to Outline Plan to Stem Home Foreclosures,” Feb. 14, 2009).

After failing to use the funds they received from the $700 billion Troubled Asset Relief Program to make a noticeable dent in the number of home foreclosures this year, JPMorgan Chase, Morgan Stanley, and Bank of America said they would halt foreclosures on principal residences until March 6. Foreclosures reached 2.3 million last year — an 81 percent increase over 2007 — and foreclosures could soar to an unprecedented 10 million in the coming years, analysts predict.

Citigroup has also implemented a moratorium on foreclosures — its second moratorium since November — that will last through March 12 or until the Obama administration outlines its loan modification program, whichever comes first.

“We believe three weeks is adequate time for the Treasury to announce — and for us to implement — a new plan,” said Jamie Dimon, chief executive of JPMorgan Chase.

President Obama is expected to present the details of his loan modification program tomorrow in Arizona, one of the states hit hardest by the foreclosure crisis.

“It’s not intended to be measured by one day’s market scorekeeping, but instead to ensure that the 10,000 Americans each day that have their homes foreclosed on — and the millions more that are barely getting by — are protected,” said White House Press Secretary Robert Gibbs.

President Obama’s plan is intended to “prod the mortgage industry to do a better job of modifying terms of home loans,” the Associated Press suggests, and it will not require homeowners to have already defaulted on their home loans to qualify for the mortgage modification program.

According to Howard Glaser, a mortgage industry consultant, if the plan were to lower the monthly mortgage payments of two million borrowers by $500 each month, it would cost both the government and lenders $6 billion each year — assuming lenders agree to match half the cost.

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