As I write this Treasury Secretary Paulson is testifying be¬fore Congress… sounding defensive with his voice raised! Congress is grilling Treasury Secretary Paulson and Ben Bernanke today regarding the Hope Now Program and the use of TARP bailout funds. Their focus was on why Treasury funds under the TARP bailout plan have not been better utilized to keep people in their homes. It is clear that the Hope Now Program is a complete failure, and few bor¬rowers are actually getting their loans modified through it. Sheila Bair, leader of the Indy Mac modification program, is having much better success in completing modifications… So Congress is now considering adopting her program nationally.

The bottom line is that homeowners are having a rough time when they try to deal with their lenders directly to get their loan modified. I’ve made some calls to lenders myself and can confirm that they are not working with homeown¬ers in a reasonable fashion. Until a national program is created it’s better to use a loan modification company for modifications. Congress is hammering Paulson over the way TARP funds are being used, especially in the case of PMC buying National City with these funds. There is gen¬eral fury about this in Congress! Increased regulation will be key in restoring tax payer and investor confidence.

The stock market fell again Monday and the bear market continues to drive indexes lower globally. A major issue on the table right now is whether to offer Treasury Funds to US auto makers… who are failing yet again due to econom¬ic conditions. Since auto makers have resisted retooling to build eco-friendly cars and trucks for at least 3 decades, there is valid resistance to bailing them out.

Real Estate lending continues to struggle in the face of a secondary MBS (Mortgage Backed Securities) market that is dysfunctional. Although bailout money has flowed into large lender’s balance sheets, they continue to horde the cash instead of increasing lending. Now the trouble has bled over into other types of credit, auto loans and other lines of credit are restricted. If you have a home equity line with an open balance you may wish to draw on the line and put the money in an interest bearing account to ensure that the available credit is not taken from you just when you need it. Call me for resources and analysis of your scenario.