The Bankerment is chasing its tail

The housing market doesn't seem any better today than it was a couple years ago.  As a matter of fact, I think things are getting worse.  There have always been, and there will continue to be families who have unexpected hardships.  Whether medical, business, or domestic, things tend to happen.

In the good old days, most people who suddenly found themselves unable to keep up with payments simply sold their homes and started over.  There were always homeowners who lost their homes through foreclosure, but it was a relatively uncommon occurrence.  With today's continuing drop in home values, an ever-increasing number of people who have life changing hardships are underwater and can't absorb the loss of selling their homes.  Their only hope in preserving a little (not much) dignity and avoiding foreclosure is to attempt a short sale. 

Every time there is another short sale or foreclosure home values take an incremental drop.  Every time values drop, more people hit the flood stage and become at risk of having their homes taken as the result of an unexpected hardship.  This is a cycle that needs to be broken, and absolutely nothing is being done.

Government and some banks are doing things to delay foreclosure on the one hand with trial modifications leading occasionally to a permanent modification.  Permanent modification often is more temporary than some temporary modifications, with the homeowner back in default in a short time. Delayed foreclosures do tend to keep inventory levels lower.

On the other hand, banks and government are taking steps to  increase inventory by encouraging short sales and streamlining the short sale process in some instances.  So, we have a strategy by government and the lending industry that appears designed increase and decrease the number of distressed properties on the market.  Isn't that great?

While the lending industry and government seem to be chasing their tails, they are ignoring the one thing that could possibly help get us through this mess.  Where are the innovative plans to encourage and facilitate sales by the millions of move-up buyers who could turn the ship around?  Yes, many of them are underwater or close to it, and, yes, many of them could afford a higher payment on a move up home.  Immobile desiring move up buyers have to be part of any housing turnaround solution.  The only sound coming from the Bankerment is the sound of silence.