By Andrew Jakabovics

Until this past week, policy makers had pinned their hopes for a solution to the burgeoning home mortgage crisis on mortgage service companies, which are the only point of contact for delinquent and soon-to-be delinquent borrowers seeking modifications to mortgages purchased by investors in the form of mortgage-backed securities. Problem was, mortgage servicers had modified only 1 percent of the adjustable interest rate loans that reset in January, April, and July of this year.

Oct. 11--California median home prices are predicted to drop next year for the first time in a decade, as foreclosures and unsold properties continue to pile up and homebuyers wait for better deals, according to a housing industry forecast released Wednesday.