Over a half a million homeowners have had their mortgages modified under the plan President Barack Obama began earlier this year. Treasury Secretary, Timothy Geithner said, “Unaffordable mortgages are now being modified at a pace faster than homes are being sold in foreclosure proceedings.” He also went on to say that 40% of the 1.2 million homeowners deemed eligible for loan modifications under the Obama plan have received them.

This is still a taxing process for many homeowners who still find themselves nearing foreclosure. So, although the administration celebrates this milestone they are still very aware that there’s much more to be done.

Foreclosures are a  continuous problem in our country, a growing source of foreclosures are homeowners who are “strategically defaulting.” Research has shown that the people involved in purposely defaulting are individuals which had high credit score when they applied for the loan, and not individuals who have low scores.

Research has also shown,  ” Strategic defaulters often go straight from perfect payment histories to no mortgage payments at all. This is in stark contrast with most financially distressed borrowers, who try to keep paying on their mortgage even after they’ve fallen behind on other accounts.” They also show that these types of defaults are popular in areas where the housing market boomed such as California, and most of these defaults take place on large loan amounts.

Where the housing market once boomed is now where is falters the most, this is especially the case the Las Vegas, Nevada. Vegas has been at the top of the foreclosure lists since the beginning of the housing meltdown, and it continues to be among the worst hit areas.

Recently DataQuick released statistics stating that Las Vegas home sales rose as investors and first time buyers take advantage of the low prices that have come from foreclosure sales. They reported that,  “Nearly 70 percent of the Las Vegas-area houses and condos that resold in July were foreclosure resales, meaning those homes had been foreclosed on in the prior 12 months.” This number seems very high compared to Southern California’s 43% foreclosure sale rate.

Through the Making Homes Affordable Program, many thought they found the solution to their mortgage troubles. Unfortunately it has proven to be a daunting process which leaves many homeowners losing the fight to save their home. There are over 4 million homeowners who qualify to receive assistance through the program, and of those 4 million about 230,000 people have had a loan modification completed.

Many are pointing their fingers to the banks. There has been a long list of complaints from homeowners who can never get a hold of a person at the bank, and if they do it is often not someone who can help them. The Kollars of Arizona are a prime example of this. They have done everything under the sun to get through to the bank, “Frustrated with the bank, Angela Baca-Kollar called the Obama administration’s helpline, 1-888-995-HOPE, but the representative told her that the hot line “can’t strong-arm the bank” and urged her to call a government-approved housing counselor.” It’s easy to see why so many lose their homes to foreclosure.

Many people are now trapped in a home they can’t afford because they went with an adjustable mortgage. An adjustable or ARM makes it so the rate starts off low, but can and will adjust later down the line. This kind of deal seemed very appealing especially to people who were looking to turn around and sell the properties with in a few years before the rates were to adjust.

Harvey Clavon is an example of this. He bought is Santa Clarita, CA home with the intention of selling it a few years later when he retired in Palm Springs. His once affordable payments are no longer easy to make, as his mortgage payments have risen to $2,700 a month because of a clause he did not notice on his contract, and are scheduled to rise above $4,000 in two years. On top of this the value of his home has decreased and the amount he owes has increased because he can only make the minimum payment. As a result many people are finding themselves facing foreclosure.

There was a new record set on the foreclosure front, and it not a good one. The number of filings went up in the month of July. “July marks the third time in the last five months where we’ve seen a new record set for foreclosure activity,” said James J. Saccacio, chief executive officer of RealtyTrac.

The worst hit areas are still the “Sand States” with California, Nevada, and Arizona being among some of the hardest hit.

Many homeowners have complained of the headaches involved with the loan modification process. Here is a list of reason as to why this process turns in to the long drawn out headache which so many have had to deal with.

1. Fax machines. Often banks and loan modification firms have homeowners send their paperwork via fax. Fax machines have a tendenacy of cutting off documents or skipping pages in long faxes.

2. Mulitple Forms. There are numerous forms involved in processing a loan modification, and the time that it takes to go through these forms not only slow down the homeowners, but also the banks, as they are inundated with these forms.

3. Outdated Documents. By the time banks get to the homeowners paperwork many of their pay stubs and documents are outdated and they need new records, again dragging out the process.

4. Poorly trained personel. As the loan modification business grows many peope are being brought on not having any experience, and with the influx of business there is  little time for actual training.

5.Unclear offers. Many homeowners are receiving offers they do not understand which leaves them unsure if they should move forward with the loan modification.

Needless to say there are many kinks that need to be worked out in this system.

Most banks are up to their eyeballs in foreclosures and subsequently loan modifications, but some are better handling it then others. Bank of America and Wells Fargo were among the worst performers of U.S. Banks in modifying loans. According to the Treasury Department, “Bank of America began 27,985 trial loan modifications, or 4 percent of its eligible loans, under the government’s Making Home Affordable Program started this year.”

The report also shows that, Wells Fargo had a 6 percent rate, following Chase’s 20 percent and Citigroup’s 15 percent. Wachovia Corp., which Wells Fargo acquired, had a rate of 2 percent.

Foreclosures are overwhelming the Government and Loan Modification Counselors. This year lender s have modified more than 235,000 mortgages under the new Obama program, but in the mean time there has been 1.8 million foreclosures in 2009.

There has been a lot of criticism with the Obama housing program, which is understanding considering the circumstances. And although it is slow moving it is still better than the program we had a year ago. Which program you may ask… that is exactly my point.

According to First American CoreLogic one in ten Californian’s with a home loan are now in default, this means they have missed several payments are close to facing foreclosure. As a result of the rise of defaults experts believe there will be a number of foreclosures in the near future  as un-employment rates continue to increase. This figure brings the default rates up to 9.5%, a year ago it was only 6%.