By ALICE GOMSTYN
ABC NEWS Business Unit
Nov. 12, 2008

Without a plan in place to get the investors and their servicers on the same page, much of what the government comes up with will be set to fail before it even gets started. Laura Davis started falling behind on her home loan payments about a year ago, so she turned to her mortgage company for help. Davis, 41, wanted to work out a plan that would allow her to continue paying off her mortgage so she and her two children could stay in their Colorado home. But, despite numerous e-mails and a letter to the company, the help never came. Recently, Davis, a single mother who works as a teacher's aide, received a notice from the company: It said that if she didn't make up her missed payments by next month, she would face foreclosure. "I just kept hoping there was something out there that would help," she said. "But, at this point, I'm ready to pack up our stuff and get out of the house." Even as the government and major banks unveil new programs aimed at reducing the ever-growing number of American foreclosures, critics and homeowner advocates worry that there are still many homeowners who won't benefit, including those like Davis.

Lack of manpower at and distrust of mortgage companies are just two of the obstacles facing struggling homeowners. Ira Rheingold, executive director of the National Association of Consumer Advocates, said that the new programs don't address the issue of second mortgages. A borrower with two mortgages can't avoid foreclosure without both modifying his or her first loan and also making some sort of arrangement with whoever owns their second mortgage. According to the Center for Responsible Lending, roughly half of all subprime loans -– loans that are granted to borrowers with poor credit history and, as of late, have been among those most likely to fall into default -– are attached to second mortgages.


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