“Making Home Affordable” was introduced earlier this year to reduce the alarming amount of foreclosures in the United States.

The $75 billion program provides mortgage lenders with financial incentives to reduce the amount that distressed homeowners owe on their principal home balances, which in turn reduces their monthly payments. It’s a plan that is designed to short circuit the foreclosure process before it begins.

Today, the Obama administration announced the program’s first milestone — banks have so far signed up more than 500,000 borrowers who need to re-work their mortgages. The good news comes three weeks earlier than expected because the deadline to hit a half-million was set for Nov. 1, 2009, according to the Washington Post.

Here’s a snip Shaun Donovan, secretary of the Department of Housing and Urban Development, on the progress:

“We’re very pleased to have reached this goal of half a million borrowers almost a full month ahead of target, but we obviously have a lot more to do.”

Donovan is making reference to the program’s ultimate goal of helping 4 million borrowers by the end of 2012. It’s a lofty and certainly noble goal.

However, the big concern is whether or not the loans that are modified will be sustainable, meaning the homeowners do not find themselves in distressed situations again down the road.

Only time will tell.

To learn more about Making Home Affordable and determine whether or not you can refinance your home mortgage click here. The official “Making Home Affordable” Web site can be found right here.

Three years ago, just as the housing market was beginning its rapid descent, we purchased a perfect three-bedroom home in South Florida for $325,000.

It was in a great neighborhood. Excellent school district. We were set.

At the time it was priced right to sell ($379,000) — other nearby homes were hovering around the low $400’s. So we were thrilled when our “miracle offer” was accepted with no counters or questions asked. We celebrated the “steal of the century.”

Unfortunately, our joy didn’t last long.

Each year we helplessly watched as our home value continued to sink like a rock. We’re still not even sure if it has hit bottom — we’re too scared to look.  Last time we checked our home was roughly worth about $250,000, which is about a $75,000 hit.

Many homeowners today are in similar if not worse positions. We understand that. Still, that’s a lot of money.

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“Making Home Affordable,” a $75 billion federal government-backed initiative to keep up to 7 to 9 million Americans in their homes by preventing avoidable foreclosures, may have an uphill battle despite its well-placed intentions.

Associated Press today passed along sobering news from a Office of the Comptroller of the Currency and the Office of Thrift Supervision report, which reveals more than 50 percent of distressed homeowners who had their home loans modified in the first half of 2008 “missed at least two months of payments a year later.”

Job loss is the key culprit: Unemployed homeowners simply can’t afford their mortgages — even if they are cheaper — because the cash flow is either not what it once was or has ceased altogether.

It’s important to note that similar “redefault” statistics for “Making Home Affordable”  are not yet available. And they probably won’t be for several months because the plan was recently introduced earlier this year.

The good news is that the housing recovery program is still in its early stages — only 12 percent of eligible borrowers nationwide (360,000) have taken advantage of the opportunity thus far. More folks will hopefully follow suit sooner rather than later.

In addition, jobless rates were down in most metro areas in August, according to recently-released data from the Labor Department. It’s a promising sign, but there is certainly a very long road ahead.

To learn more about Making Home Affordable and determine whether or not you can refinance your home mortgage click here. The official “Making Home Affordable” Web site can be found right here.

Mortgage Bankers Association today released a report that revealed 12 percent of borrowers with home loans are behind on their payments or in foreclosure, setting a record that is a 36 basis point increase from just one year ago.

In fact, it’s the highest seasonally adjusted rate since the MBA National Delinquency Survey began tracking defaults in 1972.

Here’s a snip from Jay Brinkmann, MBA chief economist, on the sobering findings:

“The increase in the foreclosure number is sobering but not unexpected. The rate of foreclosure starts remained essentially flat for the last three quarters of 2008 and we suspected that the numbers were artificially low due to various state and local moratoria, the Fannie Mae and Freddie Mac halt on foreclosures, and various company-level moratoria. Now that the guidelines of the administration’s loan modification programs are known, combined with the large number of vacant homes with past due mortgages, the pace of foreclosures has stepped up considerably.”

The report confirms that adjustable rate mortgages (ARM) that have re-set to higher interest rates and rising unemployment figures are likely the two key contributing factors behind the spike. And it’s being felt the most in Arizona, California, Florida and Nevada, which remain the hardest hit states in the nation, accounting for nearly half (46 percent) of all new foreclosure filings.

For information on foreclosure assistance remember that professional consultants can be reached right here. It’s free help. To check out the latest on the “Making Home Affordable” program and see if it will work for you go here.