Realty Check

Housing Foreclosures: So Many Programs, So Little Progress

I’m at the point now where I honestly can’t keep track of all the foreclosure fix proposals out there right now. Today we got a few more.

One is from the National Community Reinvestment Coalition, which, in what it calls a “market-driven plan,” wants the government to buy loan pools at a discount and then sell those same loans back to Wall Street, again with the discount and also after they’ve been “modified.” Of course this begs the question: Does Wall Street want them back?

Then there was the email from the Chairman of the House Financial Services Committee, Barney Frank, who is introducing legislation today that would allow the FHA to insure and guarantee refinanced mortgages that have been significantly written down by mortgage holders and lenders.

While nobody wants to use the words “government bailout,” most especially Treasury Secretary Hank Paulson, these programs all require government money for a time at least. And these proposals are on top of Paulson’s teaser freezer plan, where banks and lenders are supposedly freezing some of the adjustable rates on some of the troubled subprime mortgages.

This is on top of Countrywide’s deal with Boston-based NACA which is supposedly modifying many many loans on a case by case basis, on top of umpteen other lenders supposedly doing the same thing, and on top of FHA Secure which was the president’s plan to allow more folks to refinance into FHA loans, even if their loans are delinquent.

You would think we wouldn’t have any foreclosures at all these days, given all the plans, but California-based RealtyTrac reported today that foreclosure filings in February were up 60% from a year ago, and a year ago they were pretty darned high already.

Here’s the rub: So many troubled borrowers don’t qualify for so many of these plans. So many don’t contact their lenders about potential fixes. So many can’t even afford the modifications. So many don’t actually want their loans fixed because they have negative equity in their homes, and they’d prefer to walk away. So many fixes.

Questions?  Comments?