It is only 3 weeks since the new bailout programs "started" but don't ask for any testimonials from any homeowner whose home has been saved.

The programs were described in my recent article BAILOUT FOR HOMEOWNERS - WITHOUT WALL STREET,  and the follow up article BAILOUT MISREPRESENTATIONS AND MISCONCEPTIONS.

One program called Hope for Homeowners, a $300 billion program, has yet to get off the ground. Despite being passed by Congress in July and supposing to be effective October 1st, thousands of desperate homeowners who have sought help are being told that details haven't been worked out yet. 

As reported by CNBC.COM, "This program-just like everything else the government has tried so far-is too little, too late," says Kathleen Day, a spokesperson for Center of Responsible Lending, a nonpartisan research and policy organization, which projects there will be 2.2 million foreclosures from now to the end of 2009. "It will just not have the impact that is needed."

According to CNBC, Chris Rines, executive vice president of Citizens Home Loans, a mortgage bank and brokerage in Dayton, Ohio, says banks and private investors-who put up the money for mortgages-will balk at underwriting new mortgages for borrowers with credit scores under 580. Lenders even under the plan are looking for scores in the 600's.

Additionally, investors are reluctant to "voluntarily" write down the existing mortgages, if payments are still current for these prospective borrowers.  For example, if the home was originally appraised at $200,000 and the loan balance is $170,000, but the new appraisal is $100,000, then the new loan would be $90,000 and require the existing lender to write down the loan $70,000.

Rines says this Catch-22 is the result of inadequate consultation between government and private investors, who will likely have to wait months longer to get importantl program details before they can figure out if they can make money under the program.

"It's frustrating for us that we got to tell these people that unfortunately at this moment there just isn't enough information," he says. "And it is kind of hard for them to understand, especially when they have sheriff's notice on their door and they have kids. You know, it's tough."

FHASecure, launched a year ago, has produced slim to no results for homeowners, and it took 6 months for that program to get off the ground - and at that it may just be hovering a millimeter above ground.

The key is whether the programs are voluntary or mandatory for the lenders. Mandatory mass loan modification such as Sheila Bair, head of the Federal Deposit Insurance Corporation (FDIC) has recently suggested, are going to be necessary and both presidential candidates are now picking up on that obvious program deficit.  The key is what lever does the government have - and that may be to condition participation in any buyout of loans by the government to be tied to active and mandatory participation in these programs.

Keep tuned!

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make.  This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660  RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide!  Shortsales@Florida-Counsel.com  New Website www.Florida-Counsel.com