At a town-hall-style meeting in Yonkers, New York, distressed homeowners expressed their frustrating struggle with mortgage payments and modifications.

This frustration: where once foreclosure was fueled by subprime lending, now it is intensified by joblessness. Westchester County where Yonkers is located had an unemployment rate of nearly 7% in December of 2009, up from 5.7% in December of 2008.

These hardworking middle-class families are trying to apply for loan modifications in order to continue to pay on their mortgage and they hear one response from lenders — default first, then we’ll talk.

first tuesday take: Lenders are not ready to let homeowners become solvent easily. They want homeowners to default first in an implicit “declaration of insolvency” so that the homeowner’s credit takes a hit, on top of the hit a homeowner’s credit takes for requesting a loan modification as encouraged by the federal government. Then lenders put homeowners through the extend-and-pretend of illusionary, temporary modification. This is because lenders and homeowners have an absolute adversarial relationship and vastly different needs (except the need for solvency).  Worse yet, homeowners are clearly in no position to bargain, short of taking control and permanently defaulting (walking away) as a rational matter of astute planning for their financial future – and their quick return to solvency.

This article is explicit in its representation of the neutered response homeowners are receiving to their negative equities and their financial drain on their personal incomes.  Lenders are not frightened by shame – the government has been trying that for months now.

On the other hand, they are frightened by angry crowds. In Albany, New York in the 1970s when loan adjustments were unacceptable to homeowners, they paraded at banks and boycotted their services. We are not yet collectively mad enough to do this it seems.

Further, elections are nearing, and politicians are most likely to hear the voices of these angry crowds – their constituents who are interested in seeing the housing market stabilize. And what should these citizen voices be demanding? Cramdowns.

With California joblessness double that of Yonkers, significantly more homeowners, investors, builders, brokers and their agents are demanding to see the fast return of a stable, healthy real estate industry.  This of course is not in the best interest of the mortgage bankers and their servicing agents.

The lenders’ goal is to redirect public attention and digress from the need to clean up of loan portfolios, re-regulate in order to cap the animal behavior of lenders to protect and preserve homeownership and return vibrant competition to mortgage lending.  Be prepared for lender-backed political ads this fall.

Re: “Sick and Tired of Treading Water,” from The New York Times