There were two real estate stories in the news during the past week, one you heard about and one you didn't.
In Washington, the White House, the Treasury Department and HUD announced a "new" effort to save failing homeowners. That's the front-page story.
In Michigan, the Detroit newspapers published an official list of the people facing foreclosure in Wayne County. The list ran 122 pages according to Tom Watkins, a former state official. This is the story behind the news.
The new foreclosure effort in Washington has nothing to do with saving homeowners on that list in Detroit. It has nothing to do with saving homeowners in Michigan, California, Texas, Nevada, Florida, Ohio, Georgia or anywhere else. The Bush plan has nothing to do with saving homeowners in your community or down your street.
Treasury Secretary Henry Paulson explained what's going with surprising candor when he said that the "industry standards announced today do not change the nature of the responsibilities in the servicing industry -- servicers will continue to modify loans when it is in the best interests of the investors. Indeed, these industry standards announced today are the product of discussions among investors and servicers."
Paulson is entirely right. The President's plan is the handiwork of investors and those who work for investors. The goal is to serve the best interests of lenders, not people losing their homes. The result is absolutely what you would expect: Voluntary "guidelines" that change nothing, cannot be enforced and automatically exclude most borrowers with toxic loans.
The President's bailout plan is a gift to Wall Street, mortgage bankers and mortgage brokers. Having engineered and sold the worst loans in American history, having produced the highest foreclosure levels on record, having failed to regulate the lending system, the Bush Administration is now advocating more of the same.
With foreclosure rates expected to rise to even higher-levels next year, you don't need a crystal ball to see where the value of your home is headed. That's not good for homeowners, neighborhoods or states, but only when it's not good for the financial elite will the Bush Administration care.