lenders aren’t lending because it doesn’t make sense to loan. In a declining housing market, why lend money? If the person defaults on the loan, the bank will lose money, since the value of the seized asset is less than the value of the loan. And then the bank is stuck with a delapidating, unoccupied house.
With the continuing implementation of Dodd/Frank and the Consumer Financial Protection Bureau (Elizabeth Warren's baby), I can't see lenders ever providing financing to most potential borrowers.
What Government has accomplished is an institutionalized housing depression. As goes the housing market, so goes the economy.
there are only a few limited solutions.
1. allow short sales to the current owner of the home inorder to reboot the fraudulent documents and reset the loan.
2. allow lien splitting in bankruptcy.
3. force judges to follow the law regarding the robosigning and MERS fraud.
4. Banks take a haircut to the actual value given that they have been already paid via tarp.