Progress Illinois

As expected, a Senate Judiciary subcommittee held a hearing late last week focusing on the efficacy of federal voluntary home loan modification programs. Practically every witness told lawmakers the same thing: the programs are having very little success stemming foreclosures. The Government Accountability Office agrees. Last Thursday, the watchdog released a report suggesting that the White House's projections for how many people will take advantage of its Home Affordable Modification Program "may be overstated."

But you don't have to be a housing expert to see how little progress is being made. At most, 160,000 homes have been secured by the Obama administration's program. But since the start of the year, a whopping 1.5 million homeowners have filed for foreclosure. With unemployment still growing, the gap will get larger. The Washington Independent's Mike Lillis attended Thursday's hearing and caught this quote from Sen. Dick Durbin:

“After two years of efforts that rely on banks to volunteer to rework mortgages, it is time to admit that the programs that have been put in place thus far to ease the crisis are clearly not working."

The White House isn't sitting back on its heels entirely. Earlier this month, Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan sent a letter to the CEOs of 25 large lenders participating in the program demanding that they "devote substantially more resources to the program."

But some senators are ready to take bolder action. Specifically, they are hoping to revive Durbin's bill allowing judicial mortgage modification, which was handily defeated in the Senate three months ago. Sen. Sheldon Whitehouse (D-Rhode Island) urged his colleagues to take "another serious look" at the legislation. Over 1.8 million families could save their homes in the next three years, "if the Senate could only muster the courage to help them," Durbin reminded the assembled officials.

It will certainly be an uphill climb, given the the financial services industry's continued influence in Washington and the Obama administration's seeming indifference to the simple bankruptcy alteration. Other plans could slow the foreclosure slide in the short-term too, such as a plan favored by Sen. Chuck Schumer (D-New York) that would allow homeowners facing foreclosures the right to stay in their home for a substantial period of time (e.g. seven to 10 years) as renters paying the market rent. But this is a devastating problem that lawmakers have not adequately addressed. All avenues -- including judicial mortgage modifications -- should be open.

Image used under a Creative Commons license by Flickr user Cartographer.