Today in Nevada, Obama will announce a new initiative designed to boost his administration's flagging efforts to stem the foreclosure crisis: $1.5 billion in TARP money will be distributed to the hardest hit states to "create locally tailored solutions to the housing crisis ... the solutions could range from mortgage relief that would keep distressed borrowers out of foreclosure to more general efforts to strengthen the housing market, including home-buying programs."The programs cited as examples, including one in Pennsylvania that keeps unemployed workers in their homes, are great models. But this initiative looks to be too small to slow foreclosures on the scale that is needed, especially when the central part of the administration's effort, the Home Affordable Modification Program, is failing to reach most borrowers in trouble. Independent experts, like Julia Gordon at the Center for Responsible Lending, urge a broader overhaul [PDF] of the program that includes foreclosure moratoriums, eliminating opacity and conflicts of interest in the modification process, and reducing the principal of loans that far exceed the value of the home.
-- Tim Fernholz
