Project Lifeline to help East Tennesseans

Knoxville (WVLT) -- Project Lifeline is just the latest plan designed to help homeowners who are struggling to avoid foreclosure.

Almost every presidential candidate has already proposed a solution.

Volunteer TV's Rob Pratt has local reaction to the latest plan.

While many welcome any relief right now, at least one local expert doubts this plan or any other proposal will make much difference.

Treasury Secretary Henry Paulson stands with leaders of six major banks who have agreed to join the latest effort to help people who are close to losing their homes to foreclosure.

Director of UT's Center of Business and Economic Research Bill Fox says, "This is just kind of a public statement of what is in the banks best interest anyway."

Fox looks closely at the effect government plans like this will have on the economy.

Fox says whether it's this plan or the one proposed recently by Senator Hillary Rodham Clinton, the impact is likely to be small, "The number of people who qualify is relatively limited in each of the proposals that are out there. But I think we need to keep in mind that the industry, like the government, has an incentive for people not to go in foreclosure."

Project Lifeline covers all types of mortgages.

Foreclosure is delayed by at least 30 days for people 90 days behind on payments.

The idea is to use that time to negotiate better payment terms.

The six lenders on board for the pilot project are Bank of America, Citigroup, Countrywide, JP Morgan/Chase, Washington Mutual and Wells Fargo.

Knox County resident Jessica Rodocker says, "Normally I'm not really in favor of government bailouts, but I think this would probably help everyone and help get our economy going again."

Hollywood, California resident Chris McCuller says, "We're visiting our dad in from California, and we see the mess that's out there in California and it's really a sad issue, and it's a delicate issue too. If the Government can step in they should, but that's a lot of politics."

The key here, even if your bank is not part of Project Lifeline, there may still be hope.

If you are falling behind in your payments, talk to your bank sooner rather than later.

You may be able to negotiate your way out of trouble.

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