Fitch Rating Ltd. is projecting 75% default rate on modified home loans. It means 25% of homes will be saved from the foreclosure. How do you measure success or failures of modification plans? Is it by the cost of dollar to American tax payer? Or by saving 25% of the neighborhoods? Is it by saving in social service cost of homelessness or by saving 25% of banks? Of course I am assuming many banks and neighborhoods may have gone down without the program. Cumulative effect on the economy could have been worsened. Had my crazy American solution been adopted, the result could have been much better. How do you spread the cost over such a wide variety of factors?

The issue is we need to find the reason why 75% will fail. What preventive measures can we take? Where does the fault pan? How do we improve the results? Main street experience is that lenders are still unresponsive. It takes uniformity to get anything from the lenders. The staff is unlinked. We also need to separate incurable defaults. These are homes under the water containing strategic defaults or borrowers who have no incomes to support the mortgages. We need to turn them into renters as soon as possible with 2-3 years commitment do the inventory does not depress the housing market.

At this point it may also state that our entire system foreclosure process needs at least a fine tuning. The system works fine as long as the housing market is in an upward curve. However in down cycle, the system quickly exasperates the housing economy putting more pressure on regular re-sale market. Having our laws cast in concrete, we need a paradigm shift in thinking in all parties. For example:

1. Lenders need to consider social partners in crime effects
2. Borrowers need to evaluate their own responsibilities
3. Trustees duties and powers should be remained and perhaps widened
4. Third party roles such as mediators, brokers, and consulting agencies should be considered
5. Government responsibilities as guarantors
6. Foreclosure is not an issue between borrower and lender as its consequences are far reaching