The message is out to lenders. Start working with struggling borrowers or WE WILL MAKE YOU!

This past week was a great step forward for struggling homeowners and been quite a week on the mortgage crisis forefront. Heads are starting to roll in the form of new indictments and investigations as Congress drills Ben Benake about what the Federal Reserve is going to do to exercise their power to assist struggling borrowers.

Take for instance this message to lenders from the FDIC this week:

Sheila Bair, chairman of the Federal Deposit Insurance Corporation, said “There was a gathering of political momentum for a more ­radical approach than the investment and home loans industries had so far countenanced.”

What she is saying is that her and many other government agencies and officials agree that if these lenders do not start really assisting borrowers and offering more loan modifications, well then they are going to FORCE them to do it their way.

I have been diligently studying what lenders were doing in regards to their loss mitigation efforts and also what our government was doing to place pressure on lenders and servicers. This week, by far I have seen more news and press about this subject than ever. It finally seems that our Government really gets what the hell is going on out there and they realize that the only way to ease the foreclosure crisis is to fix these damn toxic mortgages that are causing a majority of these foreclosures.

US policymakers are shifting towards a response to the subprime mortgage crisis that would require greater concessions by investors and financial services companies.

US Treasury officials also said on Thursday they supported calls for the industry to modify adjustable rate mortgages en masse.

“We’re asking the industry to do this voluntarily to avoid unnecessary foreclosures,” the banking regulator said.

Ms Bair has outlined a ­specific proposal that would freeze the introductory interest rate on the most problematic adjustable-rate mortgages for owner-occupied homes.

A US Treasury official said: “While we do support a more systematic approach and agree that there needs to be a better approach to reach more homeowners on more than a case-by-case basis, we have not said that we support the details of her plans because we aren’t clear on them yet.”

A federal banking regulator said: “There seems to be somewhat of an evolution in the way the Treasury is looking at this problem. There has been a slow ­progression from opposition to broad loan modifications to support for a systematic approach.”

The Treasury official said that the industry needed to define categories “that could be product-specific, loan­specific or a combination of some sort” and “move quickly on them”.

It finally looks like homeowners will see a lot more political support in regards to loan workouts and loan modifications in the coming weeks ahead.