On some early Obama administration issues — labor market recovery, Afghanistan, health care reform — it seems folly to render an even temporary verdict on whether the White House has done a good job. That’s not the case with the epidemic in home foreclosures — thus far it’s been a clear failure. The New York Times’ Peter Goodman reported this weekend on the administration’s biggest effort to confront foreclosures, the $75 billion Making Homes Affordable program under TARP:

Though the administration’s program was initially proclaimed as a means of sparing three to four million households from foreclosure, “they’re going to be lucky if they save one or one-and-a-half million,” said Edward Pinto, a consultant to the real estate finance industry who served as chief credit officer to the government-backed mortgage company Fannie Mae in the late 1980s.

A White House spokeswoman, Jennifer R. Psaki, said the administration would continue to refine the program as needed. “We will not be satisfied until more program participants are transitioning from trial to permanent modifications,” she said.

Capitol Hill aides in regular contact with senior Treasury officials say a consensus has emerged inside the department that the program has proved inadequate, necessitating a new approach. But discussions have yet to reach the point of mapping out new options, the aides say.

Indeed, it seems on foreclosures White House and Treasury officials don’t even understand the problem. Treasury Asst. Sec. Michael Barr brags to Goodman that as soon as today Obama will call out by name banks reluctant to ease mortgage terms on homeowners. Hasn’t the past year shown that banks can’t be “shamed” into acting in the public interest?

The foreclosure problem is changing and expanding: once typified by subprime mortages, foreclosures are increasingly experienced by homeowners with more traditional mortgages who are unemployed. Stemming millions more foreclosures demands rule changes like letting homeowners re-negotiate the terms of their mortgages in bankruptcy court. The current cash ($1,000-a-year) and nebulous p.r. incentives for banks to permanently modify mortgages is nothing compared to the fees bank collect if a homeowner defaults. Now, there’s nothing compelling banks to act in the public good.

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