Delinquent Borrowers Get Extra Time, but the Problem Remains Massive

Retail sales were up more than expected last month. Is it a sign that the great residential real estate slowdown is almost over?

Hardly. The housing industry continues to move along at a glacial pace, with a rising number of homes for sale and home loans in default, while foreclosures are on a record-breaking pace.

The news is grim, with most of the private mortgage insurers announcing their first-ever losses as they are required to make big payouts.

Is help on the way? Let's consider what some of the more important pieces of recent industry news mean to Mr. and Mrs. Average Homeowner.

Hit the pause button for foreclosures. The Bush administration and six major mortgage lenders announced recently that the lenders would give some breathing time to borrowers facing, or about to face, foreclosure.

Bank of America, Citigroup, Countrywide Financial, J.P. Morgan Chase, Washington Mutual and Wells Fargo have agreed to participate in the government-endorsed Project Lifeline program. They will stay any foreclosure action for 30 days for those who are 90 days or more late on their mortgage. The pause will give homeowners who want and can afford to stay in their homes time to negotiate a loan modification or refinancing with their lender.

Lenders will be contacting homeowners who are 90 days late or more on their mortgages. However, if the homeowner doesn't return the lender's calls within 30 days, the foreclosure stay will be lifted, according to program details.

The real question is: After 90 days of ignoring late notices and avoiding calls from the lender, is a homeowner on the brink of foreclosure really going to pick up the phone?

As Treasury Secretary Henry M. Paulson Jr. said in prepared remarks: "Of course, there will be homeowners who still take no action, and some will simply walk away from their mortgage -- particularly those borrowers who put little or no money down and whose mortgage exceeds their home value. No program can bring every struggling borrower into the counseling and evaluation process, and we cannot help those who choose not to honor their obligations."

Project Lifeline is an addition to other programs already announced by the administration.

Foreclosures rose sharply in 2007. Even if everyone doesn't buy into Project Lifeline, plenty of people might qualify.

According to RealtyTrac, an online marketplace for foreclosure properties, the number of foreclosures soared nearly 80 percent in 2007.