Rep. Cory Gardner

Gardner’s campaign website touts his work on foreclosure legislation during his term as a state lawmaker. It states under his biography that Gardner “…worked to increase community college funding, bring state-of-the-art telemedicine to rural communities, and protect homeowners facing foreclosure.”

However, Ferrandino told the Colorado Independent he remembers a different Gardner than is portrayed on the website, one who did not vote to help those facing foreclosure.

“I hope he is not saying that he is a strong proponent of consumer protection and helping out people…. He has been on the side of deregulating financial institutions and not doing the proper protections to help those in foreclosure,” Ferrandino said. “I don’t remember him voting for any. He voted against my bills.”

Ferrandino said he is referring to HB 1276 in 2009 and HB 1402 in 2008, which he and Sen. Morgan Carroll, D-Aurora, sponsored, along with other Democrats. Ferrandino said both those bills specifically target borrowers in serious danger of losing their homes.

According to legislative records, Gardner voted against both bills.

HB 1276 allowed homeowners to defer foreclosure proceeding for 90 days if it was determined they could take part in a federal loan deferment program.

HB 1402 stipulated that individuals entering into foreclosure were to be sent a notice that informed them of the Colorado Foreclosure Hotline 30 days prior to filing a notice of election and demand with a public trustee. The bill a year later worked in tandem with Ferrandino’s HB 1276 legislation in helping to provide resources to inform those undergoing foreclosure of their options.

While it is unclear on what bills Gardner rests his claims, Ferrandino said the pieces of legislation Gardner voted for directly affecting foreclosures were little more than cleanup bills.

HB 1240 in 2010, for example, amended Ferrandino’s 90-day extension bill to ensure that in cases where borrowers elected not to take part in a federal loan program banks were notified by mortgage counselors that they could continue the foreclosure proceedings. It further ensured that after 90 days if no notice of deferral was received, loan holders could resume the foreclosure. It also required that the foreclosure notice to borrowers not be issued before all paper work is finalized.

Gardner also voted for a HB 1109 in 2009, a bill that changed the definition of foreclosure in Colorado by extending foreclosure protections to encompass residential properties that are 30 days delinquent or that have payments in default. Ferrandino said while the bill legally provided some extended protections, practically it was codifying common practice into law. “What bank doesn’t allow for a 30-day grace period?” Ferrandino said.

Gardner’s lone piece of sponsored legislation dealing with foreclosure was the result of collaboration with former Democratic Sen. Jennifer Veiga, D-Denver, that fixed the concerns of the public trustees with HB 1402, according to an article by the Denver Business Journal.

From the Denver Business Journal:

“Gardner said the bill will ‘clean up’ a bill approved by last year’s Legislature that was intended to give homeowners facing foreclosure more information about their options.

“Gardner said the trustees and deed holders are confused about the new foreclosure laws and this bill is an attempt to make them clearer.”

Ferrandino said that bill was simply house cleaning and didn’t constitute protections for homeowners.

Yet despite the seeming paucity of people-first legislation in recent years, Gardner did vote for legislation in 2007 that arguably kept people from purchasing properties and entering into mortgages that might later see them falling into foreclosure, hurting both themselves and financial institutions that provided the loans.

As Colorado’s foreclosure rate soared in 2007, Gardner voted for legislation packaged by Gov. Bill Ritter as preventing foreclosure by regulating the real estate and mortgage industries. Those votes were substantial if also piecemeal.

Gardner voted for a bill that put into Colorado statutes a code of ethics for mortgage brokers and one that created new rules for realtors prohibiting them from working with appraisers to furnish targeted appraisals that helped put buyers in risky mortgages.

Despite those overtures to regulation, Gardner did not vote for another bill in Ritter’s package. That bill, SB 203, ultimately forced state mortgage brokers to be licensed by Colorado.

In the CD4 race with Markey, individual donations from the law firm of Castle, Meinhold & Stawiarski currently constitute the top contributions to Gardner’s campaign at $28,950. The firm earned headlines during the mortgage crisis in the Denver Post as one of the top foreclosure firms for loan holding institutions in the state.

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Here, as Lowery puts it, is the “fundamental equation of the economic crisis” yet to be fully addressed: “Unemployment drives foreclosure, and the two are jointly destroying middle-class wealth as the effects of the recession linger on.” Consistently dipping middle class wealth means no recovery.

The Obama administration’s efforts to help [unemployed] homeowners thus far have faltered, failing to put a dent in the wave of home losses. Two new programs are specifically designed to help unemployed people undergoing foreclosure… But for many, it might be too little, too late.

This week, the Home Affordable Modification Program — the administration’s flagship effort to help homeowners by letting them refinance for lower monthly mortgage payments and thereby avoid foreclosure — reported dismal numbers. In recent months, the program has kicked out far more homeowners than it has helped. It has completed only 346,000 modifications — though it initially set its sights on three million.

The top of the story is all bleakness. The bottom half of the story, though, is dedicated to two recent efforts: The $1.5 billion Hardest Hit Fund; and Massachusetts Rep. Barney Frank’s $3 billion program to provide unemployed homeowners with low-interest loans up to $50,000, funded through the Troubled Asset Relief Program, to help them pay their mortgages for two years or until they find jobs.

It’s a story that underlines again fundamental questions about the government’s power and responsibility to influence economic realities that vitally matter to the citizens of the country every day.

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Declining home prices have had a significant impact on the collateral value underlying the firm’s residential real estate loan portfolio. In general, the delinquency rate for loans with high LTV [loan-to-value] ratios is greater than the delinquency rate for loans in which the borrower has equity in the collateral.

While a large portion of the loans with estimated LTV ratios greater than 100 percent continue to pay and are current, the continued willingness and ability of these borrowers to pay is currently uncertain.

The view in Virgina (Jay Mallin/ZUMA)

The note comes just a few days after Freddie Mac executive Don Bisenius took to the mortgage giant’s blog and asked people not to walk away from their mortgages. The two warnings underscore just how disastrous the rise of these economically rational calculations — made by one million homeowners last year, and accounting for about one in eight defaults — might be for banks.

It makes the banks’ slow pace of mortgage modifications perplexing: The Obama administration has created a number of Treasury-sponsored housing programs, including the Home Affordable Modification Program and a new principal-writedown initiative, to shift some of the burden of housing losses to taxpayers. Today, Paul Kiel at ProPublica notes that by the end of March, the administration had spent just $242 million out of a promised $75 billion on mortgage modifications. The government has completed just 228,000 permanent mortgage modifications — and 158,000 homeowners who enrolled in the program were dropped “either because they couldn’t make the payments or because of disqualification.” A total of 2.2 million mortgages remain eligible for modification, but untouched.

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Forecast: Continued fog.

Still, when it comes to the idea of walking away from debts, many people are held back by a sense of morality. They feel it’s wrong to abandon their obligations. They don’t want to be a deadbeat. Your instincts, while honorable, are leading you astray.

The economy is fundamentally amoral.

Sometimes I think middle-class Americans are the only people who haven’t worked this out yet. They’re operating with a gallant but completely out-of-date plan of attack—like an old-fashioned cavalry with plumed hats and shining swords charging against machine guns.

Arends goes on to point out that when a business’s debt exceeds its ability to pay, that business declares bankruptcy. He adds that “walking away from debts is as American as apple pie,” unless you’re a homeowner.

Why is Arends so profoundly down on Americans sticking out the tough housing times? He counts the ways:

• 11 million families current owe mortgages for more than their houses are worth — a full 25 percent of families that have mortgages.
• 5 million of those homeowners owe at least 25 percent more than their houses are worth.
• More than half of mortgage holders in Nevada owe at least 25 percent more than their homes are worth, as well as one-third of Florida mortgage holders and twenty percent of California mortgage holders.
• To regain even a 25 percent loss of value, a home would have to increase in value by one-third — and even if housing prices went up by 5 percent a year, it would take more than 5 and a half years to increase in value by one-third.
• Housing prices aren’t rising at 5 percent a year now.

Arends also notes that in many states, lenders cannot come after homeowners for the money they fail to make on a foreclosure or, when they do, they face significant hurdles in getting that money. With the foreclosure rate so high, many lenders don’t bother. Better yet, from Arends’ perspective, if one’s liquidity is in retirement accounts, lenders who do choose to pursue the remainder of the loan will find themselves unable to access that money at all.

Of course, from a larger perspective, if too many mortgage holders — the 50 percent of Nevadans, for instance — took Arends’ advice, they would contribute to continued depreciation of housing stocks and lenders’ unwillingness to offer mortgages to any but the least risky buyers. The one positive part of Obama’s struggling mortgage modification program, in the minds of most analysts, is the fact that it is helping to spread out the number of foreclosures over a longer period of time, thus keeping home values from going into yet another freefall. A spreading willingness among the American middle class to treat their relationship to debt (and particularly housing debt) as a business transaction instead of the fulfillment of the American Dream (whether that phrase has been trademarked yet by the National Association of Realtors^TM or not) would indeed lead many people to walk away from their often-failed investments.

Luckily for the economy, few Americans are going to stop buying into the idea that home ownership is fundamentally part of the American experience — and many people will continue to pay their underwater mortgages as long as they possibly can.

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Administration efforts to stabilize the troubled housing market have prioritized lenders above struggling homeowners, a number of House Democrats charged Thursday, leading to thousands of foreclosures that might otherwise have been prevented — and threatening thousands more in the months to come.

Although the Obama White House has offered billions of dollars to banks that successfully alter loans to make them more affordable, only 116,00 of those modifications have been made permanent, the Treasury Department reported last week. Meanwhile, nearly 3 million homes went into foreclosure in 2009 alone. The reason for the discrepancy, some Democrats contend, is clear: The decision to modify loans, under Obama’s programs, has been left in the hands of the same mortgage servicing companies that often stand to profit more from foreclosures. That conflict of interest, critics say, all but ensures that the administration’s voluntary modification program will fail.

“The industry that received a trillion dollar bailout,” Rep. Dennis Kucinich, D-Ohio, head of the Oversight Committee’s Domestic Policy subpanel, charged Thursday, “has been unwilling to absorb the losses, to write down bad debts, and their recalcitrance is holding up the resolution of the foreclosure crisis.”

He’s right about at least one thing: Despite the fact that the free-falling housing market was at the root of the global economic collapse, Washington policymakers have dedicated more attention — not to mention dollars — to the bankers of Wall Street than the homeowners of Main Street. The results are tangible. More than 2.8 million homes went into foreclosure last year — a jump of 21 percent from 2008 and 120 percent from 2007, according to RealtyTrac, an online foreclosure database. And it isn’t over. In January, another 315,000 homes went into foreclosure, RealtyTrac reported — up 15 percent from the year before.

Phyllis Caldwell, who heads the Treasury’s Home Affordable Modification Program, defended the administration’s efforts Thursday, telling lawmakers that, aside from the 116,000 permanent loan modifications under HAMP, nearly 1 million more homeowners are in trial modifications. The administration, she argued, is making “significant progress” toward its goal of reaching out to 3 million to 4 million struggling homeowners by 2012.

“There are clear signs that our efforts are having a substantial impact,” Caldwell said.

Others aren’t so sure. Rep. Elijah Cummings, D-Md., went after the HAMP for a lack of oversight he said has led to foreclosures even among those receiving trial modifications. Rep. Marcy Kaptur, D-Ohio, accused the Treasury of taking on a task better suited for housing-specific agencies like HUD. And Kucinich blasted the administration for allowing the lenders to decide if homeowners should receive help.

“You’re going to have to do better,” he told Caldwell.

And that was just the Democrats. The Republicans had their own laundry list of complaints surrounding the HAMP, most of which boiled down to their feeling that the federal government has no business dabbling in the affairs of free-market lenders to begin with. “I just question the idea that the big federal government can do these things,” said Ohio Rep. Jim Jordan, senior Republican on the subpanel.

The disastrous effects of the housing collapse can’t easily be overstated. The banks, heavily invested in mortgage-backed securities, first required bailing out, and more recently have been reluctant to lend due to the continuing volatility of the housing market. Meanwhile, it’s estimated that consumers lost more than $7 trillion in equity when the housing bubble burst — equity that many had leveraged to buy things they really couldn’t afford. The combination has exacerbated the recovery of an economy utterly dependent on consumer spending and the easy flow of credit.

Indeed, William Dennis, senior fellow at the NFIB Research Foundation, a small-business advocacy group, said this week that the collapse of the real estate market is a central reason that companies aren’t hiring. “You’re not going to address the small business problem until you address real estate,” Dennis said.

Ron Blackwell, chief economist for the AFL-CIO, agreed. His group has endorsed a moratorium on all foreclosures — a move that would force the banks to renegotiate mortgage contracts. That proposal was seen as anathema to the banking industry, however, which has retained tremendous influence over lawmakers despite its role in the economic turmoil.

“The government has been very, very tender in its care of banks,” Blackwell said this week.

Congress has also offered new fixes for the foreclosure crisis in recent months. The sweeping financial reform bill passed by the House in December includes $3 billion to help unemployed homeowners meet their mortgage obligations. The idea is that, while unemployment benefits can put food on the table, those checks often aren’t enough to cover the mortgage as well.

The Senate is expected to unveil its version of financial reform shortly, although it could be months before members of the upper-chamber vote on the bill — if they do at all.

Meantime, many Democrats are hoping the Obama administration will step in on its own with mandatory programs to knock down principal balances to keep folks in their homes.

“The administration that inherited the crisis will be judged for how they respond,” Kucinich said. “That judgment can be as harsh as if they had created the crisis themselves.”

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According to Canadian media reports, the biggest event of the Games may be the auction of Whistler Blackcomb ski area, where all the alpine ski racing events are scheduled to be held beginning Feb. 13.

Two lenders — Lehman Brothers and Davidson Kempner – have begun foreclosure proceedings against Intrawest Holdings, owner of Whistler and several Colorado ski areas, for failure to meet a $524 million debt payment, according to the Toronto Globe and Mail.

Intrawest, once North America’s second largest ski resort operator behind only Vail Resorts, sold Colorado’s Copper Mountain ski area in November but still owns Steamboat ski area and manages Winter Park for the city and county of Denver.

Heavily reliant on real estate sales, Intrawest, owned by Fortress Investment Group, took a huge hit when the resort real estate bubble burst in 2008. Unless a deal can be worked out, Lehman Brothers and Davidson Kempner reportedly plan to auction off Intrawest’s assets on Feb. 19 – right in the middle of the 2010 Winter Olympics.

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Citing data from RealtyTrac, an online foreclosure database, Bloomberg said the rising number of notices shows how job losses and falling property values are making the housing crisis even more severe.

More than 1.5 million properties received a default or auction notice or were seized by banks in the six months through June, the Irvine, California-based seller of default data said today in a statement. That’s a 15 percent increase from the year earlier. One in 84 U.S. households received a filing.

“People are losing their jobs, seeing their income go down and are underwater on their mortgage,” Richard Green, director of the Lusk Center for Real Estate at the University of Southern California in Los Angeles, said in an interview. “It’s a toxic combination.”

The foreclosure jump even prompted RealtyTrac CEO Joseph Saccacio to echo TWI’s story on Monday, and call for a new strategy to tackle the crisis.

Stemming the tide of foreclosures is a critical component to stabilizing the housing market, so it is imperative that the lending industry and the government work in tandem to find new approaches to address this issue.

The Wall Street Journal, in the meantime, takes a look at servicers trying to do loan modifications, and offers a glimpse into why so few loans are getting reworked. The story profiles the troubles of Morgan Stanley’s mortgage loan servicing firm, Saxon Mortgage Services Inc., which has been slower than most servicers to get loan modifications off the ground.

Part of the problem at Saxon is that it didn’t ramp up its ability to modify loans as early as other servicing companies. A spokeswoman for Saxon says that when Morgan Stanley purchased the company in 2006, it lacked enough employees and systems to undertake massive numbers of modifications. It wasn’t until the spring of 2007 — after its portfolio of subprime loans had already started to sour — that Saxon began to focus on modifying loans. Not until the fourth quarter of 2008 did Saxon boost its capacity to handle a large flood of requests.

All this takes its toll, not just by increasing foreclosures but by adding to the woes of already troubled borrowers. The story profiles Steve Applegate, owner of a Lake Mary, Fla., building-supplies business. Hurt by the construction downturn, Mr. Applegate last fall asked Saxon to modify his $750,000 home loan.

Mr. Applegate, a 60-year-old father of two, says he was told in January that he’d been approved for a rate cut to 2.08% from 6.5%, which would cut his $4,063 monthly payment by more than half. But the confirming paperwork from Saxon never arrived, he says, and in March, he was notified he was in default. When he phoned Saxon, a different loan negotiator recommended foreclosure.

He tried to resuscitate the earlier modification. At one point in April, he spent nearly two hours on the phone with Saxon, got disconnected twice, and was routed to four individuals, according to a recording of the call.

In May, Mr. Applegate was informed by Saxon that he had approval under HAMP for a modification starting June 1.

The good news didn’t last. When he tried to make a second payment on the modified loan, he was told he hadn’t qualified after all. When the Journal asked what happened, a Saxon spokeswoman said that the company had erred in sending him paperwork for a HAMP modification because his outstanding loan balance exceeded the program’s limit of $729,750.

Earlier this month, Saxon said it would modify his loan outside the federal program. Mr. Applegate is still waiting.

If you want to know why foreclosures seem unstoppable, there’s one reason. And the more foreclosures there are, the more dramatic the domino effect. Foreclosures drive down home values for everyone else, forcing more people into negative equity situations, which can lead them to quit paying on their loans, which means more foreclosures. And the cycle repeats itself.

Foreclosures that are delayed don’t just go away; they resurface eventually. Borrowers like Steve Applegate sit in limbo, hoping to avoid a foreclosure that may be inevitable. How many more loans are in the pipeline, just like his? How much longer will the lending industry and Washington wait before heading this off? Time is not on their side, and each month that brings fresh evidence of record high foreclosures only proves that point.

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The establishment of an independent Consumer Financial Protection Agency would give ordinary citizens a seat at the financial policy table for the first time and prevent the abuses in credit card and mortgage lending that have wreaked havoc on households all over the country.

The new agency is the brainchild of Harvard University Law School Professor Elizabeth Warren. As chair of a key oversight panel for the Treasury Department’s bank bailout program, Warren has uncovered major deficiencies in the government’s handling of the plan, including nearly $80 billion in overpayments to bailed-out banks. American News Project features footage of an interview with Warren, who explains why we need a separate agency to regulate on behalf of consumers.

Several bank regulatory agencies, the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision are already charged with writing and enforcing consumer protection rules for credit cards and mortgages, but have generally abandoned these duties to act as cheerleaders for their banks.The current structure’s problems are two-fold. First, the current regulators are funded by fees levied on the very banks they regulate. When there are several different bank regulators, regulators compete to offer the weakest oversight and attract more banks, and, in turn, more funding. The process quickly becomes a race to the bottom. When the subprime mortgage boom was surging in 2003, the OCC, a federal bank regulator, went to court to ensure that the state of Georgia’s tough predatory lending laws could not be enforced.

Second, the regulatory agencies tend to look at the health of the bank, rather than the quality of the loans it makes. If a commercial bank like Citigroup makes a really outrageous predatory loan, then sells that loan to an unregulated investment bank like Goldman Sachs, Citi’s regulator doesn’t particularly care. A new regulatory agency that answers exclusively to consumers rather than banks would be a very meaningful change for the financial system.

The rest of the overhaul is a little frightening. As William Greider explains for The Nation, instead of crafting explicit rules to curb obvious abuses, Obama’s plan relies very heavily on ceding power to the Federal Reserve. Under the new framework, the Fed would both oversee “systemic risk” in the financial architecture and regulate the banks that have become “too big to fail.” This, Greider emphasizes, is a very bad idea. The Fed has repeatedly proven itself to be uninterested in regulating banks. Citi needed $45 billion in direct cash infusions from the U.S. taxpayer and hundreds of billions of dollars in other guarantees to stay afloat, as Nomi Prins writes for Mother Jones. Who was charged with regulating the company and making sure such an outrage never occurred? The Fed.

In a video spot for GritTV, former senior banking regulator William Black argues that it makes little sense to allow banks to become too big to fail at all. Sturdier regulations are better than nothing, but the real solution is to break them up. “Why would we allow banks to be so big that they threaten the global economy?” Black asks.

Going back to Prins in Mother Jones: Elsewhere, the regulatory revamp is simply too vague to be helpful. Regarding derivatives—the financial weapons of mass destruction that destroyed AIG—it’s not clear if Obama wants to regulate the entire industry, or a small, meaningless fraction. Obama’s plan is to require that “standardized” derivatives are traded on exchanges and allow “customized” derivatives to escape investor scrutiny. But the Treasury never explains what the difference is between these “standard” and “custom” products, or how it will make sure banks don’t game the system.

Lest we forget, this crazy finance system brought us the worst economic calamity since the Great Depression. The unemployment rate, by conservative measures, is at 9.4% and rising. You may have noticed the stories about “green shoots” signaling the first inklings of economic recovery circulating through the media. But these signs are only promising, AlterNet’s Joshua Holland explains, if you take them completely out of context and ignore all of the other terrible news. The economy is in great shape … except for the millions of foreclosures that will take place this year, the skyrocketing unemployment rate, the decimated retirement funds, and the mountains of credit card debt weighing down the average U.S. consumer.

Serious consumer protections are nothing to scoff at, especially after watching an outbreak of predatory mortgage lending spawn an economic collapse. It comes as no surprise then, as Tim Fernholz notes for The American Prospect, that the bank lobby is already working to water down the new consumer protection agency’s powers. But even if a regulator for consumers makes the final legislative cut, with so many drastic problems in the current financial regulatory structure, the Obama plan simply does not do what is necessary to fend off another crisis.

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The Obama team’s regulatory proposal will only mark the beginning of a policy debate that will likely last for months. But make no mistake, serious bank reform is one of the most important steps the government can take to make the economy accountable to ordinary citizens and CEOs alike. Without substantive change in the financial sector, the next meltdown could already be underway.

As Laura Flanders explains in a video from GritTV, there is a difference between how “healthy” a bank appears to the U.S. Treasury and what it actually does for ordinary people. The TARP money was supposed to serve a public purpose by freeing up funds that could be lent out into the economy. But the very banks now going off the public payroll have been retroactively jacking up interest rates on credit cards all year and spending millions to lobby against legislation that would prevent foreclosures. Small surprise, then, that the state of the U.S. housing market is as bad as it has ever been.

“The lesson is pretty clear: you cannot stabilize the mortgage market and undercut the working family at the same time, you just can’t,” Flanders says.

This post features links to the best independent, progressive reporting about the economy. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.

(Photo/respres, Flickr)

Foreclosure filings reached their highest levels on record in March and during the first quarter of this year, RealtyTrac, an online foreclosure database, reported Thursday. Filings in March alone were up 46 percent from the same time last year. Total filings in the first quarter topped 800,000, a 24 percent increase from the first three months of 2008. Filings include default notices, auction sale notices and repossessions.

The sharp increase came as a voluntary agreement by major banks to freeze foreclosures and work out loan modification agreements with borrowers came to an end on March 6. Separately, a foreclosure ban by mortgage giants Fannie Mae and Freddie Mac ended on March 31. Like Fannie and Freddie, the banks and lenders taking part in the voluntary freeze said they hoped to use the time to get borrowers into more affordable loans and to avoid foreclosures.

With filings spiking, that goal clearly wasn’t met. The jump in foreclosures leaves some worried that foreclosures also will soar this month, with the end of the Fannie and Freddie ban. The increase also comes just as the Obama administration announced this week that it had signed on six major lenders for its Making Home Affordable plan, a major effort to help as many as 9 million borrowers stay in their homes with loan modifications and refinancings.

A spike in foreclosures coming as lenders ended their voluntary ban means one of two things, said Rick Sharga, RealtyTrac’s vice president for marketing — and neither is particularly encouraging, especially as the Obama plan finally launches. The plan was first announced Feb. 18, but the administration had to develop guidelines for how it would work.

“There are two ways to look at the increase,” Sharga said, in a e-mail. “Either the servicers…were simply saying what they’d like the public to hear and are just back to processing en masse; or they’ve decided that all of these new defaults aren’t salvageable, in which case the numbers are even more distressing.”

As The Washington Independent has reported, foreclosures freezes aren’t a quick fix to the mortgage crisis. Foreclosures consistently spiked after temporary stays ended in states from Massachusetts to California. Sharga said the problem has been the lack of a well-designed, streamlined loan modification plan. It remains to be seen, he said, whether the Obama administration’s new approach will be enough.

“I’ve been saying for well over a year now that these delays, absent a well-designed, integrated approach to modifying the loans, were simply delaying the inevitable,” he said. “That’s what’s happened in every state that’s instituted its own moratorium or delay (Colorado, Massachusetts, Maryland, California, New York, Florida…): a short-term drop in activity followed by a spike back to the previous levels.”

Sharga called the Obama plan “the best of the bunch so far,” but noted that it will take several months to get it fully in place. He said the framework of the plan is simple, but that managing the details will be “a nightmare for the industry and government to coordinate.” And the plan still might not slow foreclosures significantly, because it isn’t designed for defaulted loans that are seriously upside-down. Plus, it doesn’t protect servicers from lawsuits by their investors if they unilaterally decide to modify loans.

It’s not that moratoriums on foreclosures have been totally useless, however, Sharga said: “I’m sure that all the delays have inevitably helped some homeowners save their homes, and that’s a good thing.” His concern, he said, is how little progress has been made in stopping foreclosures, despite the many announcements of foreclosure freezes.

One reason for that lack of progress, at least in California, could be that lenders finally are going through with foreclosures for homeowners who owed more on their mortgages than their homes were worth and abandoned their properties, said Sean O’Toole, CEO of ForeclosureRadar.com, which compiles California foreclosure data.

“One thing to keep in mind is that many homeowners have literally “walked away” — in those cases there is little reason for the lender not to complete the foreclosure — which may partially explain the pickup,” O’Toole said.

Alan White, a professor at the Valparaiso University Law School who studies loan modifications, thinks that pickup will only continue. White found that servicers are dragging their feet on modifying Pay Option ARMs, which are interest-only loans that allow borrowers to choose the size of their monthly payments. The principal balance, in the meantime, continues to grow, and the loans reset after a few years to much higher payments. Former subprime lender Countrywide Financial specialized in Pay Option ARMs, and defaults on the loans led to its downfall. Some $1 trillion in Pay Option ARMs and Alt-A mortgages, or no-documentation loans, are scheduled to reset in the next year, according to Credit Suisse.

“Where I think the servicers are lagging is in being proactive about the Alt-A mortgages, especially the option ARMs, which need to get modified in much bigger numbers soon,” said White, who examined recent Wells Fargo trustee investor data to reach his conclusions.

Foreclosures also may continue to increase because those homeowners who don’t qualify for the Obama administration’s mortgage rescue plan have few options, other than losing their homes, noted Michael Collins, founder of the PolicyLab consulting group, a mortgage research firm in Ithaca, N.Y. Beyond that, a weak economy is putting further pressure on strapped homeowners, with more likely to fall behind on their loans.

“We lost 600,000 jobs last month,” Collins said. “That is huge.”

And while Fannie and Freddie ended their foreclosure ban on March 31, the mortgage rescue plan is just getting underway. The Treasury Department only on Wednesday announced the the first six participants to sign up for the plan, including three of the nation’s largest banks: JPMorgan Chase, Wells Fargo, and Citigroup. The lenders could receive up to $10 billion in incentives. More servicers are expected to participate.

Given the gap between the plan getting up and running and the end of the foreclosure freeze, some homeowners may simply fall through the cracks and lose their homes, said Elizabeth Renuart, an attorney with the National Consumer Law Center who focuses on predatory lending issues. “It certainly could happen,” she said.

As the new foreclosure numbers show, nothing so far seems to be slowing down the foreclosure machine.