Slow foreclosures now

Our view: Families in danger of losing their homes need more meaningful help to hold onto their properties, and a new administration will have to deliver it

December 18, 2008

Home mortgage foreclosures continue unabated, feeding the economic crisis gripping America, while those charged with fighting the decline are doing perilously little to keep families in their homes.

In Maryland, the number of homes in foreclosure grew by 36 percent in the third quarter of this year compared with the previous quarter, the Mortgage Bankers Association reports. In November, more than 78,000 properties were repossessed nationwide, and the Federal Reserve now predicts that new foreclosures will reach about 2.25 million before the year ends.

The foreclosures have fed a downward spiral of real estate values, created a legion of displaced families and sparked widespread protests about the government's failure to keep more families in their homes despite $1 trillion in spending on economic rescue programs. Officials in the White House, Treasury and Department of Housing and Urban Development and other agencies have promised again and again to rescue homeowners. But federal dollars have instead flowed to banks, financial institutions and corporations, including several key players in the subprime loan debacle.

Now, the home foreclosure crisis should become the first real test of the ability of President-elect Barack Obama and leaders in the new Congress to deliver on their promises and provide real relief. They won't have to be too creative to improve an intolerable situation.

A HUD program designed to help homeowners - potentially as many as 400,000 - trade in their toxic mortgages for affordable, government-insured loans could be revised and expanded. Last summer, Congress authorized $300 billion for that program, but only 200 people have applied. No loans have been modified due to its tough requirements.

Congressional leaders are threatening to withhold $350 billion appropriated for economic rescue if the Treasury Department fails to deliver a plan to assist mortgage refinancing.

Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corporation, has tried valiantly but unsuccessfully to get the White House and Treasury Secretary Henry M. Paulson to follow her lead. In October, she began helping resolve mortgage problems of 65,000 former customers of Indy Mac, the giant failed bank taken over by her agency this summer. White House critics complain Ms. Bair's $70 billion plan to help 1.5 million borrowers and reduce an oversupply of homes would be too expensive. Not so. That seems a small price to pay to shore up homeowners, stabilize neighborhoods and produce a brighter economic future across the country.

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