Tim Fernholz on why, despite an ambitious program from the administration, millions of Americans are still facing foreclosure:
The recession began in the housing markets and it will have to end there. Many Americans who took out sub-prime mortgages during the boom years are facing foreclosure, which hurts both the social fabric of neighborhoods and overall home values. Wall Street is still stuffed with toxic assets based on these home values, which in turn are hurting the banks’ ability to begin the lending necessary to spur recovery. In the absence of recovery, those who lose their jobs are in danger of losing their homes, continuing the cycle.
That’s why the Obama administration’s anti-foreclosure program, Making Home Affordable, is so critical. It’s also gotten off to a slow start — too slow. The administration took a good step yesterday by releasing the most comprehensive statistics to date about the program’s efforts to modify the loans of borrowers in danger of foreclosure. It also announced new metrics to measure its success. But those statistics point to what we’ve known for all too long: The administration needs to take a harder line on bank participation in the program and modification practices as a whole.