Lenders got themselves into a BIG jam.
It costs lenders less to continue a mortgage at a small loss and hope things get better later than foreclose now and definitely take a big loss.
It is in their own self interest (lenders) to figure out a way to keep people in their homes, making payments, so they don’t end up with the property in a down market and the losses that go with it.
Yeah but the lenders no longer own these mortgages they have been securitized with other loans and sold with bogus AAA rating.
And the problem is no longer just housing loans. This off balance sheet device was utilized for all types of debt in the past 5-10 years it's called SIV and it created a mountain of toxic derivatives.
The real purpose of this announcement is to reverse the building psychology of doom and gloom.