Countrywide rides to the rescue. Or not.

In case you didn't see the paper today, Countrywide plans to cut the interest rate on some of its option arm loans to 2.5%, and possibly even reduce the principal on others in order to help people stay in their homes. I think these efforts should help some people from losing their homes to foreclosure, and that's a good thing.

And, as we all know, the holders of California mortgages now have to actually try to contact homeowners before they're foreclosed and try to do workouts, which is also a good thing and has led to a drop-off in foreclosures.

However, our office's short sale expert tells me that banks are largely paying lip service to these loan modifications. For example, I'm told that many loan servicers will now take calls from distressed homeowners and promise a workout, but then not ever follow up. And the banks are not staffing up to meet these new challenges, even though they've had ample time to recognize the problems in the housing market and prepare for workouts. So, is this all just a game? Will banks have title to most of the residential real estate out there by the end of the decade? Stay tuned.