Well-intentioned community agencies are hitting a brick wall as they try to re-work subprime and other mortgages threatened by foreclosure. Mortgage counseling programs are not getting much cooperation from mortgage lenders. Oops, make that mortgage holders. Gone are the days when you could buy a home and your local bank held the mortgage. Nowadays, mortgage loans are promptly packaged and sold to obscure entities that often have legal agreements preventing mortgage servicers from changing the terms of mortgages sold into the secondary market.

Is Wall Street the only street that matters when it comes to owning a home? Does the entire US economy have to tank before the broken mortgage industry is fixed?

Hope Now, the housing assistance coalition, has assisted more than one million households struggling with foreclosure. It’s important to note that approximately 278,000 of these cases involved loan modifications. Modifying the terms of a mortgage loan can help homeowners maintain their payments by eliminating rapid rate increases, negative amortization and other “exotic” terms that can make it difficult for homeowners to make payments once the initial period of very low payments expires.

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Mid-January news stories brought some rays of sunshine into the mortgage and housing markets:

• Lower interest rates spurred a resurgence in mortgage application activity
• A new survey indicated a likelihood of stability for most housing markets over the next two years
• Financial institutions are responding to demand by increasing mortgage counseling services

This wave of stories included some good news for homeowners and new buyers alike, but perhaps should be best received by existing mortgage holders.

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