Congress recently passed a $750-billion bill designed to infuse cash into Wall Street and bring back confidence in America's financial system. Despite the optimism caused by a global stock rally after the Emergency Economic Stabilization Act was signed, it could still take a long time to work through the process and restore the economy given all the headwinds facing the housing market.



From the plunge in home prices, to soaring defaults on mortgages that are dumping more homes on an already glutted market, to the unemployment rate jumping to a five-year high of 6.1 percent, further reducing demand for homes… Main Street has a lot to not only work through, but to worry about.

While the Troubled Assets Relief Program contains some provisions to help stem the current foreclosure crisis, many housing advocates, including myself, don't think it goes far enough to help the millions of families about to lose their homes, not to mention their neighbors.

Foreclosures not only hurt the individual homeowner, they bring down the value of the entire neighborhood. When your neighbor's home goes into foreclosure, your house is suddenly worth less money. In fact, if you purchased a home in the last few years, you could easily find yourself in the position of holding a mortgage for more money than your home is now worth!

Much of the bailout bill works by putting money into the top of the financial-food chain. Unfortunately for struggling homeowners, they fall at the bottom. Unless and until we can stop the growing number of foreclosures, the financial atmosphere will create a downward spiral, much like a whirlpool, pulling the rest of the financial world along.

The current bill does have a provision that requires Federal agencies to encourage mortgage companies to work with delinquent homeowners to renegotiate the terms of their loans. But the language is so broad it doesn't have any teeth, and doesn't actually require any action by mortgage companies -– it is merely a suggestion.

Homeowners on the brink of foreclosure can approach their mortgage company and try to renegotiate their loans. But while the new bill encourages lenders to do that, mortgage companies are under no obligation to do so.

The only other government help to be had at this point is in the Hope for Homeowners program that was created out of the Housing and Economic Recovery Act passed by Congress this summer. That program, a government-insured refinancing option for strapped homeowners whose homes are worth less than they owe their lenders, went into effect earlier this month. But it too requires the lender's cooperation in refinancing into smaller loans and lower payments.

Some estimate the program will help approximately 400-thousand homeowners avoid foreclosure. For the rest of those on the brink, they are on their own. Some suggestions to help stem the tide of coming foreclosures include allowing the Treasury -- which may now buy and/or service the loans -- to restructure the mortgages and reduce the loans, much like bankruptcy judges can now do with vacation homes, boats and cars.

Homeowners should also be aware of a little known ´bailout´ that has already been enacted into law. Section 1403 of the new housing bill that was signed into law on July 30, 2008 (HR 3221) requires mortgage servicers to modify loans for homeowners and help them avoid foreclosure as long as three requirements are met: 1) default on the mortgage either has already happened or is "reasonably foreseeable", 2) the homeowner is living in the property as his or her primary residence, and 3) the lender is likely to recover more through the loan modification or workout than by forcing the home owner into foreclosure. This, again, requires lenders to work with homeowners by law, but it may be advisable for property owners to consult with an attorney - especially if they qualify for a loan modification under the law and the lender still refuses to work with them.

In the end, it does not look like the government is going to reach out to struggling homeowners to provide enough relief. This is a sad comment in American history… and a sad legacy to leave for our children.