Banks Temporarily Stop Foreclosures

Bank of America, JP Morgan Chase and Citigroup have announced a temporary moratorium on new home foreclosure activity in anticipation of the Obama administration's plan to subsidize mortgage payments.

Bank of America's moratorium lasts through March 6, but in a statement the bank said, "if the program's development is not complete in three weeks, we will consider a possible extension."

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JP Morgan Chase's moratorium also lasts through March 6, but the banks adds that it believes "three weeks is adequate time for the Treasury to announce -- and for us to implement -- a new plan."

Citigroup says its moratorium will be in effect until the "details of a loan modification program have been finalized, or March 12, 2009, whichever is earlier."

The three banks have so far received a total of $115 billion in government assistance.

During Congressional testimony earlier this week, banks were asked by members of Congress, including House Financial Services Committee Chairman Barney Frank, to suspend foreclosure activity for a short time.

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Frank said today that "there will be federal government money used now to buy down mortgages" for owner-occupied homes where certain criteria are met.

The Massachusetts Democrat, speaking at a breakfast sponsored by the Christian Science Monitor, said the government wants to get mortgages down to, at most, 31 percent of a howeowner's income, and added that no one thinks $50 billion, the amount the administration plans to use for foreclosures in the financial stability plan, will be enough to address the crisis.

In its latest report, the foreclosure tracking firm RealtyTrac says that 274,399 homes received a notice of foreclosure in January, down 10 percent from December but up 18 percent from a year ago.