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    800px-US_President_Barack_Obama_taking_his_Oath_of_Office_-_2009Jan20 According to federal data released on Friday, 66,000 borrowers benefited from President Obama’s administration’s $75 billion program which was aimed to protect homeowners from foreclosure.  All 66,000 of the borrowers have received permanent loan modifications and lowered interest rates, which represents a vast improvement of the number of loan modifications under Obama’s plan.

    While the numbers appear to be improving and lenders appear to be more willing to refinance existing loans, the program still appears to be a failure.  The 66,000 loans refinanced accounts for a very small percentage of Obama’s goal of three to four million loans to be refinanced by 2012.  This is especially disappointing considering the cash incentives that the administration is offering to lenders who are willing to refinance their borrower’s existing mortgages.

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    The Home Affordable Modification Program needs to find new success or else the country could be looking at a new round of rampant foreclosures.  Nearly four million Americans have lost their homes to foreclosures or short sales in just the last two years.  Another fifteen million homeowners are estimated to owe more on their mortgage than their home is presently worth.

    For the time being, the federal government plans to continue with the Home Affordable Modification Program, which does appear to picking up steam.  Both the Treasury Department and the Department of Housing and Urban Development (HUD) have announced that they were working to convert trial loan modifications into permanent modifications.

    According the federal sources, at the end of December there were over 850,000 homeowners who were active in the loan modification program each of which were experiencing, at least temporary, payment reductions of $500 per month.  Of those 850,000 participants, 92% were on trial modifications while the other 8% had received permanent modifications.  HUD reports that an additional 46,000 borrowers are near receiving a permanent modification offer.

    All of the successful loan modifications have lead to a decrease in interest rate.  43.2% of the successful loan modifications have also lead to an extended repayment period.  While reduction in principle owed is quite expensive, 26.6% of borrowers have received a reduction in loan principle.   

    The government also plans to fully support Fannie Mae and Freddie Mac, which will allow the two companies to keep interest rates low, refinance mortgages, and provide tax credits for housing development.

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