No party yet for housing rebound

FIRST, the good news: The housing market is showing signs of a rebound.

Now, the bad news: The housing market it showing signs of a rebound.

The U.S. Commerce Department this week reported that sales of new homes were up nearly 10 percent in July (story Page 65), and home prices are rising in most parts of the country. These housing indicators are carefully watched benchmarks that tell us how the economy is doing.

And while no one is hoping for an economic turnaround as badly as we are, there are reasons we're not yet throwing our hats in the air to celebrate this news. However natural it might be to breathe a collective sigh of relief that the bad dream of the last few years may be over, the reality is that the bad dream is still alive and well. It's still being played out across the country and on the streets of Philadelphia. And too much optimism could mean important changes in oversight and regulation will be sidelined.

There are at least three dirty canaries in the coal mine that suggest people are still reeling from the fallout of the mortgage meltdown. The first: The Residential Mortgage Foreclosure Program, led by Judge Annette Rizzo, a nationally recognized program that gets homeowners facing foreclosure to work with lenders and the courts, is still going strong. Every week, people who are about to lose their homes stream into Rizzo's courtroom.

The second: The nonprofit Consumer Credit Counseling of Delaware Valley reports a record number of clients this month, exceeding July's, when the agency had more than 13,000 appointments, 7,600 of those related to housing, mostly defaults on mortgages. That's up from 4,600 housing clients in July 2008.

In case the crisis has passed you by, consider: That's more than 7,000 homeowners at risk of losing their homes in a single month, in this city alone.

The third: Every day, there is yet another phone number consumers are directed to call to "save their homes." Too often, these numbers belong to companies charging high fees, with promises to help consumers modify their mortgages, but lead only to more debt for homeowners in trouble. In fact, many players in the subprime-mortgage market have switched gears and now aggressively sell these modification services. (Note to consumers: The rule of thumb for turning to companies for help is don't pay a fee, and make sure they are HUD-certified.)

That's why we're concerned about how slowly Congress has acted on the formation of the Consumer Financial Protection Agency. Granted, health care is filling its plate, but what could be more urgent than regulation and oversight of financial institutions? The products they were able to concoct led to the economic meltdown. Current regulatory frameworks are inadequate - especially the belief that "the markets are self-regulating."

Harvard Law School professor Elizabeth Warren, who heads the Congressional Oversight Panel overseeing the banking-industry bailout, has sounded the alarm, not only about the mishandling of the bank bailouts, but about the resistance to changing the regulatory status quo.

The Center for Responsible Lending has provided a smart set of guidelines arguing for an independent, consumer-oriented agency that can make sure the predators don't feed on consumers again. (www.responsiblelending.org).

Powerful interests still have the ability to water down the consumer safeguards that an independent agency must provide. The fact that these are the same interests that have caused such widespread misery should sound a disturbing note in Congress, and constituents should remind their representatives of the need for fast action.