Deutsche Bank (NYSE: DB) expects almost half of all U.S. homeowners to be underwater -- figuratively, of course -- by 2011.

Declines in home prices and the fact that some of those difficult mortgages just aren't going away put 26% of homeowners in this situation by the end of last March, and it seems the situation is only going to get worse. Unlike the early stages of the credit crisis, which were driven by subprime mortgages, the next iteration will have a greater effect on prime mortgage borrowers, which comprise two-thirds of the loans outstanding.

When you're serving your country, there's a good chance you'll move around a few times . . . which can conflict with the traditional American dream of homeownership. Soldiers who bought homes several years ago could be stuck selling now at depressed prices -- and on fairly short notice.

Needless to say, the financial pressure can be profound. A Staff Sergeant with a decade of service behind him, for example, is paid just under $37,000 a year. Even when you add in the health care and other benefits provided by the Department of Defense, it's still hard to handle a serious loss on a home.

The February stimulus plan included provisions to help military personnel in this situation, but little has happened. Soldiers complain that information is hard to find and guidelines aren't available. So far, none of the funds have been disbursed, and the federal government is keeping its collective mouth shut.

Home foreclosure filings in the United States hit a record 1.9 million in the first half of 2009, according to RealtyTrac –-- on more than 1.5 million properties. Again, unemployment is one of the primary culprits, as a lack of income makes it pretty tough to bring a loan at risk of default up to date. The number of filings is up 9% from the second half of 2008 and up almost 15% from the same period last year.

Last month, foreclosure filings were up 5% relative to May and up 33% from June 2008. The month's action was the third highest on record, and it was the fourth month in a row in which there were filings on more than 300,000 properties.

This morning, Citgroup (NYSE: C) announced a new initiative that it expects will help the recently unemployed mortgage customers that have fallen behind in their payments. The goal is to keep these customers in their homes by reducing their monthly mortgage payment for three months.

Who is eligible for this program? Borrowers with first mortgages whose loans are owned and serviced by CitiMortage. The borrowers also have to meet other guidelines to be eligible for program participation.

According to Citigroup, the required monthly payment for most qualifying customers will be roughly $500 per month.

One of our readers asked the following question about the cost of foreclosures.

• "I would like someone to explain where the costs of a foreclosure go. It was reported on TV that the average cost is $75,000.00 per house. Why so much and can someone breakdown who gets the money. Legal, recording fees, advertising, etc."

A report by the Joint Economic Committee of Congress estimates that the average cost of a foreclosure, to the homeowner, lender, local government, and neighbors (whose homes decline in value), is $78,000. By contrast, preventing the foreclosure would cost $3,300 per home on average. Here's how the report breaks out that figure among various "stakeholders":

• Homeowner: $7,200
  Lender: $50,000
  Local government: $19,227
  Impact on neighbor's home value: $1,508
  Estimated total cost of foreclosure: $77,935

Homeowner: To me these costs might not even include everything, it might be more. The homeowner had the cost of moving in and moving out. Some disruption to normal working hours (and pay) if they still have a job and the loss of equity might be far greater. If you only lost 2% of a $400,000 home, you would have lost $8,000.

By now you've probably heard the reports. Merrill Lynch (NYSE: MER) CEO Stan O'Neal is being pushed, making him the first CEO of a big investment bank to be held directly accountable for his company's exposure to the subprime debacle. Of course, his clandestine efforts to sell the company without the knowledge of the board didn't help his case.

The Wall Street Journal wonders (subscription required) when Washington will take some responsibility:

And speaking of Washington, that's one place where no one is being held accountable for the subprime boom and bust. That includes in particular the Federal Reserve, whose far too easy monetary policy created a subsidy for debt that fueled the housing and subprime mortgage excesses. One difference between Wall Street and Washington is that in the latter no one ever admits a mistake, much less suffers for it.

This is exactly right. Last week, I wrote about Washington's obsession with increasing homeownership -- seemingly at any cost, even if it meant encouraging mortgages for people who couldn't afford them. The Fed's lax monetary policy combined with this to make a subprime crisis an almost forgone conclusion.

But all that we hear is Congress blustering with calls for investigations and lawsuits against the lenders. They need to look in the mirror.