Of all the programs the government has put forward to help homeowners avoid foreclosure, none of them do much about the underlying problem of unemployment. But that could be about to change.

While current government efforts to avert foreclosure, including the administration's widely promoted Making Home Affordable Plan, focus on reducing mortgage payments to make them more affordable, none of them so far address the more fundamental problem of homeowners who can't make even a reduced mortgage payment because they're unemployed. The Obama administration is considering new measures to that would help even unemployed homeowners avoid foreclosure, according to recent reports by Reuters and CNN.

Details of the new proposals are sketchy, as no administration figures have been willing to speak on the record about them so far. However, it appears that the administration is considering direct help for the unemployed as it becomes increasingly frustrated with the relatively small numbers of homeowners helped so far under current initiatives.

Forbearance, grants under consideration

There has been no official word on the new proposals, but administration sources have told both new organizations the administration is considering a variety of new options aimed at unemployed homeowners. These reportedly include loan forbearance - allowing borrowers to postpone mortgage payments - or providing grants to help cover mortgage payments or instituting a program that would enable foreclosed homeowners to remain in their property as renters.

All options face practical and political obstacles; however, it appears the administration is keen on doing more to ensure to stem the rising tide of foreclosures that is undermining the real estate market and the economy itself.

The Administration's current efforts to stem the growth of foreclosures, through the loan modification and refinance programs under its Making Home Affordable Program, have focused on reducing the cost of monthly mortgage payments for financially stressed homeowners. However, homeowners who have lost their jobs or otherwise suffered major economic setbacks have been largely ineligible for these programs because they lack the means to continue making even reduced mortgage payments.

Tuesday meeting to address foreclosure assistance

The Treasury Department is scheduled to hold a meeting with major loan services on Tuesday to discuss how lenders are managing their loan modification and mortgage refinance programs and try to ensure that homeowners seeking help are not being improperly disqualified.

More than 1.5 million homes have been hit with foreclosure notices in the first half of 2009, an increase of 15 percent from one year ago, according to the foreclosure reporting service Realty Trac.

Though many of the initial foreclosures over the past year were due to subprime mortgage holders being unable to keep up with scheduled rate increases or other changes in loan terms. more recently escalating unemployment caused by the overall economic collapse has been the bigger problem in the housing market.

Published on July 27, 2009