More Fiddling as Foreclosure Crisis Rages On

The good news is the Obama Administration appears to be finally conceding that its efforts to staunch the foreclosure crisis are not working as planned.

It doesn’t take a rocket scientist – or a Nobel winner, for that matter - to figure that one out, with foreclosures set to rise right into 2010.

Despite tens of billions commited to stem foreclosures by an array of federal and state programs over the past few years, banks are seizing homes and condos at record rates.

An astounding 14 percent of homeowners across the country were either in foreclosure or behind on their payments at the end of September, the Mortgage Bankers Association reported last week.

So U.S. Treasury Department officials are rolling out today changes to a key, $75 billion that tired to head off foreclosures by paying mortgage companies to modify loans.

But bad news is that instead of the sweeping overhaul that’s needed, the Obama Administration appears instead to be focusing on what amounts to some minor modifications.

So what changes are being talked about? Well, lenders will now have to wait until loan modifications are finalized before picking up their $1,000 bounty. No more taking the money and not delivering – that’s reassuring.

Treasury officials are also threatening to highlight lenders who are falling down when it comes to loan modifications.

But the bigger problem, of course, is that all these modifications won’t help because the nature of the foreclosure crisis has moved on.

These are basically tweaks to already failed efforts to save homeowners stuck with goofy subprime loans. Sure, there are still a lot of folks out there with these crazy loans, but most of the worst cases have long since lost their homes.

Instead, rising joblessness is driving the latest increase in foreclosure rates, which are rising the fastest among homeowners with prime loans.

Rep. Barney Frank, chairman of the powerful House Financial Services Committee, has already floated a proposal to deal with this emerging – and potentially even more devastating – strain of the foreclosure crisis.

But the Obama Administration, by contrast, appears determined to continue fighting a battle long since lost.