A plan to halt foreclosure proceedings on defaulted homeowners may have a positive effect for the U.S. mortgage market and related bonds, Standard & Poor’s said in a report on Thursday.

The "Project Lifeline" announced by six large banks this week is the broadest plan announced to date to ease terms on unaffordable mortgatges, S&P said. By keeping people in their homes, the plan may help reduce declines in home prices that create a downward spiral for U.S. housing, it said.

Banks’ foreclosure plan may help mortgage debt -S&P