Speaking at today's 2010 Multicultural Real Estate and Policy Conference in Washington, DC, Federal Deposit Insurance Corporation (FDIC) Chairman Sheila Bair went on a charm offensive by defending the Home Affordable Modification Program (HAMP) against criticism that the program regulary fails to reach its goals and is destined to fail. "It's still too soon to know how successful it will ultimately be," said Bair, at the conference. "It is true that the numbers of trial and permanent modifications have lagged behind program projections. But at the same time, we saw a slowdown in the pace of new foreclosures in the second half of last year." "This suggests that servicers were at least looking for alternatives that could minimize their losses and keep people in their homes," she adds. Bair said the administration now recognizes that problems in the mortgages industry continue to evolve. "Now we're dealing with underwater mortgages," she said. "That's why we're actively looking at principal write-downs within our loss share agreements and other failed bank programs." Bair added that such extreme measures may be necessary to prevent strategic defaults, especially in homes with mortgages that are currently at 150% LTV or more. Getting it down to 100% LTV may be vital to preventing homeowners from walking away. In terms of improving mortgage financing, the FDIC chair promoted securitization as a solution. But this will only happen after regulatory reform and the clearing-up of bank balance sheets. Read the full speech, available here. Write to Jacob Gaffney