The housing market has remained at the center of the nation's economic troubles throughout 2010. The housing market started the year flat on its back, and it's ending the year in nearly the same condition.
Home sales are still depressed, home-building remains near a 50-year low, and home prices are still about 30 percent below their peak.
Part of the problem this year has clearly been high unemployment. But the ongoing foreclosure crisis also keeps glutting the market with unsold homes. Meanwhile, the government's efforts to prevent foreclosures over the past year were a pretty big disappointment to many people.
A Homeowner's Struggle With The Foreclosure Prevention Program
Debra Dahlmer, 55, has lived in her home in Gloucester, Mass., for most of her life. Over the years, most of the family has worked at the nearby Gorton's frozen fish processing plant.
But back in 2008, Dahlmer's husband passed away. She never missed a mortgage payment. But she could see she was running out of money and would soon fall behind.
"I just found when the life insurance was gone, and with the medical expenses, I just couldn't do it," Dahlmer says.
She is a diabetic and is legally blind in one eye. Dahlmer also has such limited sight in the other eye that she has to read with a magnifying glass pressed tight against her face.
The prospect of losing her home was scary, especially since her 80-year-old mother lives downstairs.
"Where would my mom go?" Dahlmer says. "Where would I go?" She worried about being on the street.
But Dahlmer has guaranteed income because she's on disability, and she has a tenant living in part of the house. With the rental income, and the outstanding balance of the mortgage on the house, she appears to be a perfect candidate for President Obama's foreclosure prevention program, called the Home Affordable Modification Program (HAMP).
HAMP was supposed to help up to 4 million Americans keep their homes. But it's only assisted a small fraction of that number.
Dahlmer's situation offers a case study in the program's failures. Despite her efforts over the past year, she hasn't been able to obtain a permanent fix -- in the form of a more affordable mortgage payment -- approved through the program.
She's been working through her lender, Bank of America. But that has turned into a paperwork nightmare.
"I thought a big business was supposed to know what they’re doing," Dahlmer says.
A Frustrating Pattern: Banks Losing Documents
Like many other homeowners, Dahlmer says she's been tearing her hair out faxing in proof of income and tax documents, only to have the bank lose them.
For her that's especially hard because of her vision problems. Still, she takes notes about the process in huge print with a black magic marker.
Over the past year, she's repeatedly asked call center workers what's going on. She says they tell her, " 'I'm sorry, but you haven’t sent in the documentation.' "
Dahlmer says she has sent in all the documentation. But it gets lost again in a never-ending cycle. The bank then asks for something they never asked for before.
"It just goes on and on," she says.
Dahlmer says she's been getting all kinds of foreclosure-related junk mail, and that's getting her very nervous again.
After NPR contacted Bank of America, the bank says they're looking into Dahlmer's case and hope to resolve it within a few weeks.
Sharp Criticism From A Government Oversight Panel
A congressional oversight panel this year has been harshly critical of the Treasury Department for failing to enforce the agreements the major banks made to take part in the administration's HAMP program.
All of the major banks have been having similar problems -- losing documents and rejecting homeowners who appear to qualify for unknown reasons. Hundreds of thousands of homeowners are now falling out of the federal program.
"The foreclosure modification effort has been a real mess," says Mark Zandi, the chief economist of Moody's Analytics. With millions of people facing foreclosure, he acknowledges that it's been a very difficult challenge for the banks. But, he says, "even considering that, it just hasn't gone well."
A Housing Bottom In 2011
Despite all these problems, Zandi thinks housing is finally approaching a turning point. He expects the market to bottom out in 2011.
"It's been a five-year road south, and it's been a complete cratering of the market," he says. "But I think 2011 marks the end of that crash."
Zandi says there are some more housing price declines ahead, as all these foreclosures continue to glut the market with millions of homes at fire-sale prices.
But by next summer, he expects prices to start stabilizing, with some price growth in 2012.
Access To Credit, Fannie And Freddie's Future
Another big issue for the housing market this year was access to credit. Interest rates have been very low by historical standards. But many people can't qualify for those low rates.
"This is one of the variables that we have to correct," says Brian Chappelle, a mortgage consultant with Potomac Partners.
He thinks the pendulum has swung too far and lenders are being too tightfisted. One problem, he says, is that Fannie Mae and Freddie Mac, the government-backed mortgage giants, have been in a wrestling match with lenders of all sizes -- forcing them to buy back loans that have gone bad.
Some of this wrangling is good for taxpayers because it saves them money. But Chappelle says it's got the banks nervous and less willing to make new loans.
In 2011, Congress will debate what to do with Fannie and Freddie. Right now, the government is using them to prop up the housing market. But all sides want to see a major overhaul of the government's role in housing.