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Obama mortgage-aid effort is struggling to stem the rising number of foreclosures in US

WASHINGTON (AP) — Nearly half of the 1.3 million homeowners who enrolled in the Obama administration’s flagship mortgage-relief program have fallen out.

The program is intended to help those at risk of foreclosure by lowering their monthly mortgage payments. Friday’s report from the Treasury Department suggests the $75 billion government effort is failing to slow the tide of foreclosures in the United States, economists say.

More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to foreclosure listing service RealtyTrac Inc. Economists expect the number of foreclosures to grow well into next year.

“The government program as currently structured is petering out. It is taking in fewer homeowners, more are dropping out and fewer people are ending up in permanent modifications,” said Mark Zandi, chief economist at Moody’s Analytics.

Besides forcing people from their homes, foreclosures and distressed home sales have pushed down on home values and crippled the broader housing industry. They have m

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Atrios on the Obama administration’s weak response to the recession:

I’m sympathetic to the argument that a bigger stimulus couldn’t have gotten through Congress. So what did they do wrong? They failed to actively support judicial bankruptcy for primary residence first mortgages (aka cramdown) and they totally screwed up HAMP. The latter was entirely under their control and the former would have stood some chance of passing if the White House had thrown its weight behind it. It didn’t.

Actually, it’s even worse than that! Stephen Labaton of the New York Times, who has done some of the best reporting on the legislative nuts and bolts of financial reform, wrote the definitive account last June of how the banking industry teamed up with Republicans and centrist Democrats to defeat the cramdown proposal. Their secret? Lots of money, a solid front of opposition from Republicans, and, yes, a lethargic effort by the White House: