I doubt anyone will be surprised to hear that Toll Brothers (NYSE: TOL), a luxury homebuilder, faced another quarter of poor earnings [subscription required]. The company said it expected to report a 36% fall in its fiscal fourth quarter revenue to $1.17 billion. Robert Toll doesn't think the worst is over yet. Signed contracts dropped from 1,595 a year ago to just 1,073 in the fourth quarter. The company's backlog of inventory on Oct. 31 was $2.85 billion, down 36%, but still pretty high.

Last month Robert Toll said the housing market hasn't bottomed out yet and he doesn't think Federal Reserve interest rate cuts will help fix the problem. He believes only a return to conventional underwriting standards will ultimately fix it. While I agree with Toll, the truth of the matter is that fixing the housing market will be a very long road. More than a return to conventional underwriting standards needs to be done if we want to hear some goods news from the housing sector any time in the next two years. In many areas of the country, the inventory of homes for sale sitting on the market would take two to three years to clear, and it's only going to get worse as foreclosures rise.

I can certainly understand why those who pay their mortgages on time would be angry about giving help to those who don't. However, the reality of the situation is that all homeowners -- both those who are paying on time and those who are not able to -- are hurt by the rising inventory of unsold homes. As inventories rise, prices will drop. If anything can be done to help people stay in their homes rather than force them out, it's good for everyone. While I don't support the idea of a free ride or bail-out, there are many ways to restructure loans to give people an option, such as longer loan terms and reasonable fixed rates. Hopefully we'll see some rational moves by the loan servicers and those they serve soon. I'm sure many of them are starting to realize that regular payments on a loan, even at lower interest rates, is better than getting the vacant home back by foreclosure.

Lita Epstein has written more than 20 books including "The 250 Questions You Should Ask to Avoid Foreclosure" and "Reading Financial Reports for Dummies."