By the end of 2008 it is estimated that another 1.5 to 2 million foreclosures will occur. The effect of a housing disaster like that will be felt in every corner of the economy and every income bracket from the poorest to the Forbes 400. So, with everyone on board for this upcoming recession, you would think companies would be lining up to help consumers avoid foreclosure.

Instead, company after company has either completely refused to assist its borrowers or provides a “face saving” Band-Aid like solution to it. The latest company to jump on the face saving bandwagon is Countrywide with their new program to help 80,000 borrowers.  What about the other 100-200,000 Countrywide customers facing foreclosure? Oh, well they weren’t 100% up to date with their payments at the launch of this new program, so they will be excluded from it. This means that the customers who are most likely to default and cost Countrywide the most money, they are igrnoring, and the customers who have been able to meet their payments and offer the smaller risk, they are catering to.

Even in these times of financial anarchy, the banks are still choosing to following irrelevant banking rules and procedures. This is not a market where traditional values should be followed. It was not following them that got us here and created this situation, so Im sorry to say, its going to be not following the rules that will need to get us out. Every person facing foreclosures because of subprime mortgages and ARM’s, regardless of if they are current on their payments, needs to be offered some sort of help. I don’t feel that they deserve forgiveness, as many of their jumped head first into loans they never should have qualified for, but I feel like they should be given extensions on their resets, offered rate freezes, and have the foreclosure time line extended for them.

 One interesting offer on the table is from the Federal Deposit Insurance Corporation (FDIC) and it involves a national mandatory freeze on subprime mortgages to 7-8% for people who are current, live in their house, and are facing an upcoming reset. While once again this is only for people who have never been late or missed a single payment, it is a step in the right direction. This will keep almost 1.75 million people from foreclosing due to upcoming rate increases that they will now be able to avoid.

Its sad when the government has to step into private business to clean up their mess, but this is a case where the banks have proven they are completely inept at managing their own risk. Offering up several million loans to people that never should have even gotten through the front door of the bank and then crying to the government for help when they all default, shows the banking world has completely lost touch with realistic and logical banking practices.