In my previous blog I was very excited for those who may be in serious jeopardy of losing their homes, but then I read an interesting letter to the editor in the Miami Herald, February 21, from Professor Donal Jones, law professor at the University of Miami.

Apparently, from what Professor Jones says, my enthusiasm was baseless.  He says, "If it [the house] is not sold the bank is often able to maintain the repossessed house on its books without showing a loss. The bank can list the value of its asset based on what it would be at ''maturity.'' The now-empty house may have been vandalized and have rotted drywall. But on paper the repossessed house is as valuable as it was before the bubble burst. The bank has no skin in the game."

Moreover, since so many of these homeowners at risk of foreclosure are underwater with their mortgages, without a considerable amount of debt forgiveness, homeowners who continue to pay their mortgages will continue to pay mortgages in which they will have no equity for a long, long time, unless the real estate market miraculously recovers soon.  

Professor Jones tells us that the Federal government has started a Foreclosure Alternative Program, where they pay incentives to mortgage companies to allow homeowners to sell their homes through short sales or to allow homeowners to turn over their homes in lieu of foreclosures.

Apparently, Mediation is not the panacea that I thought.  It looks that the Federal government will have to lend a hand to homeowners after all.