by Jesse Jackson

While economists declare the recovery at hand, more Americans than ever are losing their homes. The financial bailout rescued the banks, but it has done precious little for homeowners faced with collapsing home values, ballooning mortgages and increasingly lost jobs that make it impossible to stay up on payments.

Across America, middle-class homeowners -- and, disproportionately, African-Americans and Latinos who were targeted by predatory lenders -- are facing the loss of their homes. If big banks on Wall Street are too big to fail, why isn't America's middle class also too big to fail and deserving of relief?

The figures are stark.

More than 9 percent of all mortgages are now delinquent, up from 7.8 percent a year ago, according to the Mortgage Bankers Association surveys. The percentage of home loans that are overdue by 90 days or are in foreclosure is at record highs. A new study from the Center for Community Change and the National Council of La Raza reports that 1.3 million Latino families are likely to lose their homes from 2009-2012, suffering an average financial loss of about $89,000. All told, middle-income Latinos will suffer a staggering $98 billion in lost wealth, a shattering loss to those families who were working the hardest and making their way up the ladder of opportunity.

And African-Americans were particular targets of subprime-loan peddlers. In Massachusetts, a study by the Boston Federal Reserve Bank showed that in 2007, almost half of African-Americans who moved out of their homes did so because of foreclosure rather than a sale.

The Treasury Department program -- Making Home Affordable -- has proved to be inadequate.

About 200,000 mortgages have managed to get permanent adjustments to a lower monthly rate (with no adjustments to lower principle owed). But the plan itself estimated that 3 million to 4 million homeowners would be aided by 2012 when the program expires. This isn't working.

Part of the problem is that the banks have been reluctant to cooperate. They prefer to hold the loans as if they had their original value as long as possible, so they don't have to write off losses on their books. The loans that are securitized often make any adjustments almost impossible. And now, more and more homeowners are behind in their payments because they've suffered loss of a job or loss of income. Under the current plan, they will have a hard time establishing eligibility for a modification.

This is a costly failure.

When a home is foreclosed, the values of homes across the neighborhood plummet. Empty homes often attract vandals and crime. Families who lose their homes suffer massive distress, marriages are tested, children do worse in school and confidence is shattered. And in areas of concentrated loss, the economy is simply devastated. In Florida, 26 percent of all mortgages now are at least one payment or more late.

We need the administration to stop bribing the banks to cooperate and start operating directly to assist homeowners in distress. The one piece of muscle in the Obama program -- letting bankruptcy judges adjust mortgages to help keep people in their homes -- was defeated in Congress, victim to a massive bank lobby push. Now the administration ought to raise the stakes. The government could do direct refinancing of loans at federal borrowing rates, rather than allowing banks to force people out of their homes. In the 1930s, the Home Owners' Loan Corporation did this, and in the end, helped refinance about 1 in 5 mortgages.

Alternatively, the government could use its power of eminent domain to acquire mortgages or securitized debts. It could then write down the principal to the current value of the house, and pass the savings along in the form of a more affordable mortgage, or accept the homeowner has lost the equity in the home, but enable them to rent it at market rates. For the unemployed, the government could simply provide a loan for payments made while seeking employment, to be repaid over a longer period of time.

The more people who are allowed to stay in their homes, the more quickly the economy will recover, and the less harm will be done to humans in distress. These programs require more federal muscle and will than money, but the cost could easily be recouped by taxing the big banks for the assistance provided to rescue them, or by a tax on excess bonuses or income.

One thing is clear.

The banks aren't going to do this on their own, even though bankruptcy is more expensive than remortgaging. And the current federal program is not enough. We need real action before the housing crisis helps trigger a second recession, and further human misery.

Available at Amazon.com:

The Next Hundred Million: America in 2050

Housing Crisis is Getting Worse | Jesse Jackson