As mortgage defaults resume their climb, there's a new round of specious claims that Fannie Mae and Freddie Mac or Barney Frank and Chris Dodd forced banks to loan money to unqualified borrowers.

The fact is Washington didn't peddle subprime loans, Countrywide Mortgage and other lenders did, sometimes steering people who qualified for conventional loans into loans that were riskier for borrowers but more profitable for lenders.

But that's history. The worst of those loans were foreclosed long ago. Much of what we're witnessing today involves people who kept making their mortgage payments even when they owed more than their homes were worth.

Some stayed afloat until they lost their jobs in a down economy. Many turned to mortgage relief programs that, by and large, haven't provided much relief. Some resorted to short sales or just walked away, frustrated if not heartbroken by record-low interest rates they couldn't obtain.

Three-quarters of all underwater borrowers — about 8 million homeowners nationwide, a quarter of them in California — are paying above-market interest rates, according to the latest data.

If these homeowners could refinance, they would save hundreds of dollars a month in interest, increasing their ability to stay in their homes. But because they have no equity, they can't qualify for a new loan.

Such stagnancy is not only keeping housing prices down, but economists increasingly believe it's keeping the entire economy down, as consumers, fearing that homes will never recover their value, scale back.

That's why two developments are so promising.

First, the nation's five largest lenders appear to be giving ground on the issue. According to news reports, they have sweetened their $20 billion offer to settle all state and federal claims that lenders engaged in abusive foreclosure practices.

The banks offered an additional $2 billion to refinance underwater loans for people who have kept up their payments; negotiators for the state and federal governments want $5 billion, which would refinance 300,000 loans.

California's attorney general, Kamala Harris, walked way from the talks earlier this month, saying the offer was inadequate. As there's likely to be no deal without California, she should use her leverage for the larger figure.

However, the settlement would only address a sliver of the problem. U.S.-chartered banks own about 20 percent of outstanding mortgages.

<NO1>Most of the <NO><NO1>rest get sliced, diced and packaged as mortgage-backed securities, and those loans wouldn't be covered by the settlement.

That's why the second development, a federal plan to relax refinancing rules announced Monday and touted by President Barack Obama, provides more hope. The new rules will allow more underwater borrowers to refinance and reduce fees. The program is limited to owners whose loans have been owned or backed by Freddie Mac or Fannie Mae since before 2009 and have not missed a payment in six months.

Gien it's limited scope, it's not going to be the silver bullet that saves the housing market. But it's another step forward.

Combined, these steps will assist homeowners who are current on their payments, moving us closer to balance in the housing market and a true economic recovery.