Merkley unveils plan to stem tide of foreclosures, help struggling homeowners

• Provide homeowners with a single point of access when they seek a loan modification to improve accountability and ensure greater clarity during the process.

• Establish a third-party review prior to foreclosure and fully enforce existing law.

• Implement the "lifeline" bankruptcy option by providing bankruptcy judges with the power to modify the terms of home loans just as they can with vacation homes and yachts.

Foreclosures are expected to reach a peak this year while prices bottom out as the nation's housing crisis trudges into its fifth year. 

Lenders repossessed more than 1 million homes in 2010, up 14 percent from the previous year and the most since 2005, according to a report released by RealtyTrac, a California-based company that tracks the foreclosure market. 

Foreclosures could rise by 20 percent this year while prices will likely drop by 5 percent, as the market begins to make a turn toward recovery, the report said. 

“We will peak in foreclosures and probably bottom out in pricing, and that’s what we need to do in order to begin the recovery,” Rick Sharga, RealtyTrac’s senior vice president, said last week. "But it’s probably not going to feel good in the process."