Foreclosures Set to Move Higher As Unemployment Persists

“While the Obama administration has continued to focus its mortgage relief program, the Home Affordable Modification Program, on the problem of risky loans, the biggest cause of foreclosures these days is actually unemployment.

With the nation’s jobless rate continuing to hover above 9%, millions of homeowners are at risk of facing foreclosure. And although the housing program run by the Department of the Treasury is supposed to provide help to the unemployed, the assistance is often insufficient.

For instance, the program allows the jobless to postpone mortgage payments for three months. But the average length of unemployment is now nine months.

The Wall Street bailout allocated $46 billion to the Treasury Department to help homeowners avoid foreclosure, but so far it has only spent $1.85 billion. Last year the Department of Housing and Urban Development received $1 billion to give two-year loans to unemployed homeowners, but thus far applications have been accepted in only five states.

In general, Republican members of Congress have sided with the banks and mortgage holders, and opposed programs that fight foreclosure. Meanwhile, the Obama administration has appeared somewhat indifferent. According to the Times, Treasury SecretaryTimothy Geithner wrote a letter in December to Rep. Barney Frank (D-Massachusetts) expressing hesitation about extending payment periods for unemployed homeowners because regulators and “other industry stakeholders expressed strong reservations.”

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