California in a housing depression ... prices drop 16% ... Is a 30-day grace period really the best that Paulson can come up with?

Paulson's Wild Ride on the Hindenburg: "The worst has just begun" | By Mike Whitney | 15/02/08 "ICH"

... [Treasury Secretary] Paulson is currently on a losing-streak ... First, he tried to entice struggling investment banks to put their mortgage-backed bonds in a Super SIV (structured investment vehicle) to see if it would help off-load billions of dollars of down-graded junk onto unsuspecting investors.

That flopped. Then he brokered "Hope Now"” (1-888-995-HOPE) which was designed to help the banks and homeowners work out the details for a rate freeze on mortgage resets. Paulson assured the public that 500,000 homeowners would take advantage of the program, ... So far, the Hope Now hotline has provided counseling to just 36,000 borrowers. Representatives have suggested loan workouts for fewer than 10,000 of them, ...

This week, Paulson announced another new program, "Project Lifeline”, which targets homeowners who are delinquent 90 days or more on their mortgages. ... At the very best, the program just buys a little more time for the homeowner to pick out a nice rental where he and is family can live after the bank repos his home. ... So, why is he wasting time with these bogus public relations gambits when he should be making serious recommendations?

Paulson's so called "mortgage modifications" just don't cut it. They're pointless They just put off foreclosure until a later date. The only real solution to the problem is renegotiating the mortgages with the lenders so that people with negative equity” have an incentive to continue making their monthly payments. Otherwise, the number of "walkaways" will mushroom and wreak havoc on the entire industry.

This week's housing stats from California illustrate how desperate the situation really is. DataQuick Information Systems said Wednesday a total of 9,983 homes were sold in Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura counties last month, a drop of nearly 50% from January last year.

50%. That is unprecedented. California is in a housing depression. Is a 30-day grace period really the best that Paulson can come up with?
...
For the last four months, housing sales in California have plummeted 40% (year over year) At the same time, prices in Southern California have dipped a whopping 16.7%. The market is freefalling. ...