Above all, as many as four million of the sixty million American homeowners with mortgages had fallen behind on their payments by early 2009 and were at risk of foreclosure. It took a home builder of unusually sunny disposition to invest in a new subdivision with this massive shadow inventory hanging over the market. A further ten to fifteen million households were encumbered with mortgage debts that now exceeded the value of their homes. For the moment, they were still current on their mortgages, but there was always the risk that they might walk away, adding their homes to the list of bank-owned properties. In addition to the drag on the construction sector, there were the losses for the banks. There was the deterioration of neighborhoods blighted by untended properties. Above all, there were the dislocation and suffering of families losing their homes.

In the 1930s the Home Owners’ Loan Corporation helped to mitigate these problems. But there was no HOLC this time. Instead the Obama administration responded with a set of limited initiatives that failed to deliver even on their own modest ambitions. The Home Affordable Modification Program (HAMP) was designed to provide financial incentives for banks and mortgage servicers to reduce interest rates for four million homeowners unable to make their monthly payments. Servicers satisfying program provisions received an up-front fee of $1,000 and further modest payments if the borrower remained current. But as of late 2013, just 1.3 million mortgages had been modified under the program. The government had spent barely a quarter of TARP funds earmarked for the purpose.

The Home Affordable Refinance Program (HARP) was designed to permit an additional five million homeowners not immediately at risk of foreclosure to refinance at lower rates. To qualify, a mortgage must have been acquired by Freddie Mac or Fannie Mae. Conveniently from this point of view, Fannie and Freddie now owned or guaranteed a majority of US home loans. Less conveniently, Freddie and Fannie’s independent administrator, Ed DeMarco, who was charged with rehabilitating the GSEs, resisted enlisting them in the cause. By mid-2011 barely a million homeowners had been helped, and by the end of 2013, six full years into the crisis, fewer than 3 million homeowners had availed themselves of this program. There were also initiatives for lending money to unemployed homeowners and transfers to the states for anti-foreclosure programs. But fewer than one in thirty homeowners were helped by these government programs, compared to one in ten in the 1930s.