Bloomberg is reporting on mortgages:

Almost one-quarter of U.S. mortgage holders owed more than their homes were worth in the second quarter and that figure may rise to as much as 30 percent by mid-2010 as job losses and foreclosures climb.

I had heard a report recently stating that by 2011 one half of all mortgages would be considered underwater.  The news and predictions continue to be dismal and the government is looking the other way as the American people sink further and further into the muck of the economic crisis.

The plans and hopes of the Obama admin for the people living on Main Street are falling far short of any substantial help.  In an article written by David Walsh:

According to a US Treasury report August 4, mortgage servicers, under the Home Affordable Modification Program (HAMP), have offered to change 406,500 loans and have actually modified, on a three-month trial basis, only some 235,000, just 9 percent of delinquent borrowers.

A number of banks that have received billions in taxpayers’ money, such as Wells Fargo, Wachovia and Bank of America, have modified even a smaller percentage of mortgages (6 percent or less).

These derisory figures come in the face of what a representative of the National Consumer Law Center (NCLC), in testimony before a Senate committee July 23, called “a foreclosure tsunami, which threatens to destabilize our entire economy, devastate entire communities, and destroy millions of families.”

A July 30 New York Times article suggested that lenders “have little incentive to help homeowners.” It notes that the main impediments to a greater number of loan modifications are not staff shortages and logistical issues, as the mortgage firms claim, but their reluctance “to give strapped homeowners a break because the companies collect lucrative fees on delinquent loans. Even when borrowers stop paying, mortgage companies that service the loans collect fees out of the proceeds when homes are ultimately sold in foreclosure. So the longer borrowers remain delinquent, the greater the opportunities for these mortgage companies to extract revenue—fees for insurance, appraisals, title searches and legal services.

The Times observes that mortgage companies are paid to manage pools of loans owned by investors and typically collect a percentage of the value of the loans they service. “They extract their share regardless of whether borrowers are current on their payments. Indeed, their percentage often increases on delinquent loans.”

A recent paper by the Federal Reserve Bank of Boston concluded, “The rules by which servicers are reimbursed for expenses may provide a perverse incentive to foreclose rather than modify.”

As usual, Banks and Wall Street are the ONLY ones making out in the econbomic crisis.  Homeowners face a dismal future……and as usual, Wall Street is getting richer at their expense.

On another sour note, Reuters is reporting:

The U.S. Treasury Department should consider expanding programs to cleanse troubled assets from bank balance sheets if current efforts fail to restart markets or if economic conditions worsen, a U.S. bailout watchdog panel said on Tuesday.The Congressional Oversight Panel said in its latest monthly report that toxic loans and securities continue to pose a threat to the financial system, particularly for smaller banks that face mounting losses on commercial real estate loans.

Last October, the entire $700 billion U.S. bailout program was aimed at buying up the toxic assets that threatened to bring down the financial system. But due to the plan’s complexity and with market confidence rapidly deteriorating, then-Treasury Secretary Henry Paulson quickly shifted gears to use the money for direct capital injections into banks.

Since then, Paulson’s successor, Timothy Geithner, announced plans to entice private investors to buy “legacy” securities and whole loans from banks. But accounting forbearance that allowed banks to avoid recognizing losses on these assets combined with large institutions’ ability to raise capital after regulator “stress tests” in May reduced investor angst over toxic assets.

Do not look now but it is sounding like Wall Street will get more of your money and you will get the same song and dance that you got last year.  If money is being shoved at someone it should be Main Street for they will most likely spend it and in doing so create demand for goods and services.  The pursuit of liquidity is not doing much to solve the economic problems that Main Street is facing.  It ius however, making those on Wall Street very happy and a lot richer.