Program coming for mortgages in trouble

— -- Assistance is growing to help financially distressed homeowners, but the nation's mounting caseload of foreclosures and mortgage delinquencies is rising faster.

Assistance is growing to help financially distressed homeowners, but the nation's mounting caseload of foreclosures and mortgage delinquencies is rising faster.

The Bush administration should have a plan for a systematic approach to help homeowners rework their mortgages within weeks, the Treasury official in charge of implementation of the $700 billion financial rescue package said Thursday.

"The plan is under development now," Treasury's Neel Kashkari told members of the Senate Banking Committee.

One idea under consideration would give government loan guarantees to financial institutions that modify mortgages to make them more affordable.

Federal Deposit Insurance Corp. Chairman Sheila Bair Thursday backed such loan guarantees as a way to keep the housing market from falling further, noting that foreclosures lead to lower prices, which lead to a further drop in prices and more foreclosures.

"We are behind the curve. We are falling behind," Bair said. "There has been some progress, but it has not been enough. We need to act. We need to act quickly. We need to act dramatically to have more wide-scale systematic modifications."

Bair said she hoped there would be a program announced "in the not-too-distant future."

Housing advocates also have been pushing for larger efforts to address foreclosures.

"We're talking about 2 million households going into foreclosure in the next 12 months," says Adam Kruggel, director of the Contra Costa Interfaith Supporting Community Organization.

An advocacy group for homeowners, it is hosting an event in Antioch, Calif., on Monday to launch a national campaign calling for permanent modifications.

Hope Now and the Federal Housing Administration's Hope for Homeowners programs are a good start, he says, "But aren't at the scale that we need — the need is so immense."

How immense?

Last year, there were 2.2 million foreclosure filings. In September, foreclosure filings — default notices, auction sale notices and bank repossessions — arrived at 265,968 properties nationally, a 12% decrease from August but still 21% higher than in September 2007, according to RealtyTrac.

Meanwhile, interest rates on $29 billion of adjustable-rate mortgages will reset by the end of 2009, raising the average payment by $1,053 a month, according to Fitch Ratings.