Last February in Arizona, President Obama unveiled his plan to slow foreclosures and help the housing market get back on track. Looks like that plan was a bit over hyped. Here we are almost a year later and just a fraction of the original 3 – 4 million that were projected to get help, have actually been helped. Most are having trouble even completing the application process. Those that are trying can’t get help from the bank that is supposed to be helping them. The more borrowers that can’t be helped, the more foreclosures we will be seeing in the months and years to come.

RealtyTrac reports that 2009 foreclosure notices were up 20% from 2008. In addition, home prices are down 30% from their high mid-2006. If the current estimate of foreclosures this winter happens, the average price will continue to fall. Foreclosures still are the biggest threat to our housing market and to our economic recovery.

Obama’s plan was to help borrowers by lowering their interest rates and making their payments more affordable. The temporary modification was supposed to become permanent after the borrower made three payments on time and completed all the required paperwork. As of December, only 7% of those who are in the program have completed it, according to the Treasury Department. Another 5% have dropped out of the program entirely because they missed a payment or were found to be ineligible otherwise. The rest are still waiting for an answer from their lender.

Of course the banks are blaming the homeowners for not getting paperwork returned on time, but of course from what we are seeing, banks tend to ‘misplace’ a lot of paperwork or you can just never get through to the department you need.

Bank of America, has completed modifications for less than 2% of the estimated 200,000 borrowers that have enrolled in the program. Wells Fargo, another large lender, is aslo having very little success in converting their borrowers that have been approved for modifications.

Most lenders are approving very few of their applicants. However, Ocwen Financial Corp. and Carrington Mortgage Services, have modified loans for 40 percent of their enrolled borrowers and rejected only a few. So is this a problem with the government formula for loan modification or a failure of the lenders?

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