Treasury Worried About Next Wave of Foreclosures.

Treasury Officials stated yesterday they are still concerned about a coming wave of foreclosures, many from pay option arms and many from the prime jumbo basket, hit particularly hard by unemployment. The Treasury Home Affordable Modification Program or HAMP is also reporting that 1/3 of all loan modifications are delinquent.

Loan Servers seem to have exhausted the supply of plausible candidates for loan modifications, and will find many loans beyond saving.

HAMP is also gearing up for the April 5th launch of the Home Affordable Foreclosure Alternatives program, or HAFA, and is specific to 2 segments of the distressed markets. Deed in Lieu and Short Sales are the main focus here and the requirements are clearly spelled out for lenders and borrowers. The bulk of these programs are designed for Fannie Mac and Freddie Mac liquidation, but many other lenders are also included. For some borrowers this will be a good thing, for others they may not qualify.

Obviously the Treasury sees the tsunami of problems still ahead, but I doubt their actions will fix the housing market in the near future. I believe they have underestimated the numbers, they have not addressed the commercial defaults, and finally until unemployment shrinks, all these programs, are too little too late. Incedently the banks benefit from these programs far more than the consumers do, so what else is new from our wonderful government.