"It is clear at this point, that foreclosures are being HAMPered” says Sean O’Toole, founder and CEO of ForeclosureRadar. “Where foreclosures head from here will depend a lot on the administration’s Home Affordable Modification Program, commonly referred to as HAMP. We can clearly see that this program is postponing an awful lot of foreclosures, but don’t expect a wave of foreclosures if it fails, instead expect further government intervention.”
A key feature of the HAMP program is a 3-month trial period, during which foreclosures are postponed to see whether or not the homeowner makes the new, reduced payment as agreed. As a result,the number of scheduled foreclosures that
are being postponed at the lenders request or with their agreement has doubled since details of the program were announced. At the end of August 2009 there were 131,300 foreclosures scheduled for sale, compared to 64,177 at the end of February 2009. If the HAMP trials succeed, foreclosures should begin to cancel at record rates, which has yet to happen. If HAMP trials fail, foreclosure sales should increase, which also has yet to happen.
"but don’t expect a wave of foreclosures if it fails, instead expect further government intervention."
The government has yet to reduce any level of support for the housing market in history, once a level of support has been introduced it has always remained in effect. I think this is the money quote for the whole article and people need to change their expectations of the market going forward. To expect a rational market where a weak overleveraged borrower who isn't paying is replaced by a stronger borrower who can and will pay is apparently just not going to happen. Money will be printed, the sanctity of contracts will be set aside, it is clear whatever can be done will be done to keep the market inflated. But the other side of that is sales will stay low and the whole RE industry will lose jobs and be much smaller, you can't have it both ways.