October 1, 2007 (LPAC)-- Administration efforts to ward off serious Congressional response to the worsening home mortgage crisis have been to encourage lenders and borrowers to "work together" to solve the problem; as if one could reason with a hungry shark.

A survey by Moody's, written up in CNN Money, says that, so far, only about 1% of adjustable rate mortgages (ARMs-- which began to reset to higher interest rates in July, with another "wave" coming due this month) have been satisfactorily resolved in this fashion. Lenders have a host of excuses for why this program isn't working, some real, some imagined. First of all, lenders are not inclined by nature to do this, and are understaffed with counselors, phone lines, etc. In many cases, they argue that adjusting the loan won't solve the problem: often the delinquency began before the rate increase, indicating that the problem goes beyond just the mortgage. In cases where loans have been "bundled" and resold (almost all), lenders are restricted as to "how many" and "how much" they can adjust their purchasers valued "income stream." Often, in these cases, it may no longer even be possible to discern who the actual "owner" of the loan is.

Considering that fully 60% of the value of a loan is lost in the foreclosure process, it is actually in both the borrower's and creditor's interest to find a solution when problems occur. But this collapse is not limited to simply the real estate markets, being systemic in nature, only a federal mandate such as that proposed by LaRouchePAC in the form of the Homeowners and Bank Protection Act, can erect an effective "firewall," and create the breathing room necessary to find equitable solutions.