News trickling out of regulatory offices and lending institutions indicates that the much-touted HUD foreclosure prevention program set to begin in October has hit a few snags. According to American Banker, it is likely that regulatory agencies will not be prepared to begin handling the cases by October 1. In addition, it is expected that this program will meet with the same very limited success that FHASecure did, and for the same reasons.

The biggest obstacle is that loan servicers–those who buy the loan from the original lender and then collect the payments–are the ones foreclosing and are not in a position to originate a new loan as required  by the program. And of those who are licensed and staffed and capable of originating loans, many do not have FHA licenses which are required by law in order to originate an FHA mortgage.

So if you are counting on a rescue to get you out of a home foreclosure in october, don’t. the only thing you can count on most likely is more red tape.