As borrowers desperately try to rework their mortgages they keep running into the same old barrier, the mortgage companies are so buried with reworks they can not get to everyone. Between TARP and Making Home Affordable program and other expectations many of the larger mortgage lenders just do not have the manpower and resources to support all the borrowers looking to rework the mortgages that need reworking.

Experts say the problem is being felt nationwide as the loan-servicing industry struggles to become a housing counseling agency, too.

Lenders have neither the staffing nor the expertise — and possibly not the motivation — to keep up with the demand from home-owners who want their mortgages reworked so they can stay in their homes.

One housing expert compares the new workload for the loan servicers with that in the education system that no longer teaches just math and reading, but also must provide health care, teen counseling and after-school activities.

“It’s a whole retooling of an industry,” said Julia Gordon, a senior policy counsel at the Center for Responsible Lending. “You will not get a servicer who will say, ‘I don’t want to do it.’ ” But in truth, she said, “they don’t want to do it.” via Las Vegas Sun.

With the average cost of a foreclosure at $60,000 dollars lenders Boards of Directors are not eager for homes to fall into that black hole. But the worker bees are buried under a deluge of calls and problems, and lets face it, to them it is a job. So the imperative to find a way to work out a loan is less than the need to write new loans or just get through the day.

And with the losses that banks are seeing you know HR is not racing to hire people to work out these issues, even if they could find people who were experts in working out the bad loans according to the ever changing regulations.

It is a classic catch 22 for the banks and the borrowers. A shame, but one fully to be expected.

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5. Robert Shiller on Mortgage Risk