Fighting Foreclosures By Any Means Necessary

Regardless of whether we all see green shoots or yellow weeds, whether we've hit bottom or keep hurtling downward, reality suggests that we're many years from normal.

The economy could begin to pull out of the recession later this year but a full recovery could take as long as six years, according to a forecast issued today by the Federal Reserve.

The projections were grimmer than those issued by the Fed in January. Yet, they still reflected a growing sentiment inside and outside the central bank that the economy has turned a corner and is declining at a more moderate pace than in the fall.

Fed leaders predicted the economy would shrink this year and then expand at an annualized rate of between 2 and 3 percent in 2010, before gaining further momentum in 2011. However, Fed leaders anticipated labor market conditions will be weak for some time. They projected unemployment to rise to between 9.2 and 9.6 percent and stay in that range through the end of next year before leveling off at between 7.7 and 8.5 percent in 2011. As of April, the unemployment rate was 8.9 percent.

I trust that assessment, and if anything it's too optimistic. We're seeing other developed economies basically in depression right now, and liabilities that were an outgrowth of the market crash, like our record pension insurance deficit, will really start to affect pensioners and those who will have less money to spend for years to come. The market remains 40% below its peak.

Our biggest problem right now remains the foreclosure crisis. The economy cannot sustain continued foreclosures at this rate. It impacts construction, because new inventory need not be created. It impacts the lenders' bottom lines, which affects lending throughout the economy. And small business who cannot get credit cannot create jobs. Then there's the ripple effect of foreclosures to property values, which affects the bottom lines of local governments, resulting in decreased services, particularly for education, and fewer jobs. Rising foreclosures hit just about every aspect of the economy. And the bill the President signed this week won't do much to help.

After months of debate, the final version of the latest bill eliminated a key provision that would have allowed bankruptcy judges to modify mortgage terms. Faced with heavy pressure from the banking industry, Congress again tabled the highly contentious provision after several attempts to introduce it over the past year. That leaves the decision to refinance a mortgage up to lenders and investors holding securities backed by those loans.

Meanwhile, homeowners stuck with unaffordable payments, or who now owe more than their house is worth, must slog through the red tape of negotiating a new loan with their lender.

I've come to the point where this guy's activism is starting to look pretty good to me.

Bruce Marks doesn't bother being diplomatic. A campaigner on behalf of homeowners facing foreclosure, he was on the phone one day in March to a loan executive at Bank of America Corp.

"I'm tired of borrowers being screwed!" Mr. Marks yelled into the phone. "You're incompetent!" Before hanging up, he threatened to call bank CEO Kenneth Lewis at home to complain about the loan executive.

Mr. Marks's nonprofit organization, Neighborhood Assistance Corp. of America, has emerged as one of the loudest scourges of the banking industry in the post-bubble economy. It salts its Web site with photos of executives it accuses of standing in the way of helping homeowners -- emblazoning "Predator" across their photos, picturing their homes and sometimes including home phone numbers. In February, NACA, as it's called, protested at the home of a mortgage investor by scattering furniture on his lawn, to give him a taste of what it feels like to be evicted.

In the 1990s, Mr. Marks leaked details of a banker's divorce to the press and organized a protest at the school of another banker's child. He says he would use such tactics again. "We have to terrorize these bankers," Mr. Marks says.

Something needs to shake up the status quo. Because the results for the overwhelming majority of people, even those with seemingly no connection to homeownership or foreclosures, will be catastrophic.