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I have to say I’ve been confused over the last few months. Treasury officials, big lenders like Countrywide

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[CFC  Loading...      ()   ] , and President Bush keep telling me that everybody is now working together to stop foreclosures, to modify loans, to keep Americans in their homes. So then why do other economy-types, like, say, the Fed Chairman, warn that things are going to get worse before they get better? I thought it was all fixed!?!

“Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,” said Mr. Ben Bernanke at a conference in Florida this morning.

Just yesterday Treasury Secretary Paulson announced that 45,000 subprime borrowers in trouble have been helped in just the first month of his Hope Now initiative (this is the one where banks and lenders agreed to freeze certain subprime ARMs at their teaser rates for five years). But many now argue that Hope Now is a temporary fix and may cost borrowers more in the end, once the freeze is up (not to mention that a lot of folks aren’t eligible for the plan).

Then there’s another problem: A lot of borrowers don’t want to be helped; they’d rather walk away. These are the borrowers who have negative equity in their homes and don’t want to pay something for nothing. I found it very interesting yesterday that the Treasury Secretary, during his speech, seemed at once plaintive and then angry:

“Negative equity does not necessarily result in foreclosure… Homeowners who can afford their payments and don’t have to move, can choose to stay in their house. And let me emphasize, any homeowner who can afford his mortgage payment but chooses to walk away from an underwater property is simply a speculator – and one who is not honoring his obligations.”

This morning, Mr. Bernanke said, “Borrowers are hampered not only by their lack of equity but also by the tighter credit conditions in the mortgage markets.” He went on to say, “even though workouts may often be the best economic alternative, mortgage securitization and the constraints faced by servicers may make such workouts less likely.”

So on the one hand I’m supposed to have hope, now, but on the other hand I’m told that while all of this is a nice idea, it can’t all work. A fellow blogger, Debi, at housingdoom.com just wrote to me. She gave me some Phoenix numbers on how many homes for sale are bank owned or vacant, and it’s a lot: “Bernanke is fighting gravity here,” writes Debi. “Whatever the cause, the problem in a nutshell is that there are too many homes, and the prices are still out of line with historic fundamentals. Until the pendulum swings back the other way, these “bailouts” will be acts of futility.”

I have to say I agree.

Questions?  Comments?