A report released on Tuesday by the Congressional Oversight Panel revealed that the Obama administration’s loan modification program will only assist 700,000 out of nearly 4 million struggling homeowners it had intended to assist. Ted Kaufman, chairman of the Oversight Panel said, “It’s not what we were all hoping for, but it is something.”

The Obama administration’s Home Affordable Modification Program (HAMP) was launched in 2009 with a commitment of $75 billion to help homeowners who could not afford their hefty mortgage payments. However, now it seems that the Obama administration may allocate only $4 million dollars to the program, a steep drop from the initial intended $75 billion.

The Oversight Panel said, “Absent a dramatic and unexpected increase in HAMP enrollment, many billions of dollars set aside for foreclosure mitigation may well be left unused. As a result, an untold number of borrowers may go without help.”

The housing market in Southern California showed signs of improvement in March with sale prices increasing. It helps that people are rushing to buy before the federal tax incentive expires, that along with low interest rates make it a good time for buyers. The prices of new and pre-owned homes jumped 14% last month, which is a reassuring increase for a market that has faltered so much over the last few years. Though many experts are still mixed on whether this is a sign of the market improving, as many believe that more foreclosures are on the way.

Almost 15 million people are upside down on their mortgage and very few loan modifications are actually being completed, as a result Treasury Secretary Timothy Geithner sent a letter to the 25 biggest mortgage servicers encouraging them to process more loan modifications. The letter also details a meeting to be held on July 28.  The letter states:  “…there is a general need for servicers to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share.”

Whether this will be a successful move on Geithner part is still unclear as many lenders are being bombarded with loan modification requests. The completion of a loan modification is not the easiest of tasks leaving many lenders dragging their feet.

In California banks are moving slower to act on mortgage defaults. While defaults increase the number of foreclosure notices have decreased, typically the two work hand in hand.

ForeclosureRadar Chief Executive Sean O’Toole said, “A number of lenders appear to have self-imposed California’s latest foreclosure moratorium on themselves, despite having received an exemption from it.” He is speaking of the California moratorium, which mandates lenders postpone foreclosure auctions notices by 90 days.

Bank of America for example filed 48% fewer notices in June than in May. Its unclear whether lenders simply are overwhelmed by the volume of foreclosures or if there is an effort to slow foreclosures to ease the flood of repossessed properties hitting the market.

It was beginning to seem as though the housing market was stabilizing, but new reports show that a new wave of foreclosure could be here as soon as the end of this summer. Housing prices were beginning to steady thanks mainly to the large amounts of foreclosure properties, but the increase of unemployment is bringing a new surge of foreclosures, according to one report employers shed nearly a half-million jobs in June.

As it has in the past the rise of foreclosures will affect the housing prices leaving more people upside down on their loans.  As it stands now the housing market will be a problem our nation will be dealing with for several years to come.