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The White House remains on the wrong track in its thinking on how to solve the mortgage mess. They do not understand how the mortgage business really works, nor how banks function in this area of their business, nor how borrowers really think. While they have some very smart advisors who are trying to create a fix, the reality is they do not have people who are deeply experienced in commercial banking and mortgage origination and servicing. They are working under various major misconceptions of what could work and why, how homeowners think, and what will motivate lenders and borrowers to act on programs. The result is we have had several programs which have failed and the White House and Congress have no idea why. The main problem is they are starting with a bad set of assumptions and are locked into regulatory and procedural dogma which inhibit solutions. As a result the housing mess is with us for a long time.

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