“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.

And even though the value of our house has dropped significantly, our monthly mortgage payments remain the same. So, too, does our interest rate. We’ve tried to refinance, secure a lower interest rate at the very least, but no dice … we are too far upside-down to be considered.

We’ve got great credit. Pay our bills on time. And do all the things we are supposed to do. Yet, when we try and somehow improve our situation to compensate for the lost value in our investment, we hit dead ends.

It’s frustrating, making people think how it’s possible banks, lenders and the federal government are seemingly bending over backwards for those actually deep in (or possibly feigning) distress. Meanwhile, the “good guys” have few if any options available to reward their  hard work.

Bloomberg.com explores this issue today, revealing how underwater homeowners have resorted to “strategic default” in response to the current housing crisis. This is when homeowners stop paying their mortgages while remaining current on other debts. It’s a practice that rose 128 percent (588,000 cases) compared to last year and represents a small percentage (4%) of all underwater homeowners.

Of course, there are other options, including selling the home for a huge loss (and paying the difference), staying put until the local market corrects or short-selling the house.

The latter option appears to be the best. Short sales are a great solution when it comes to short circuiting the foreclosure process. It’s typically a win-win all the way around under the circumstances.

We have decided to ride out the storm. It’s certainly not a “strategic” choice, but one that we think is good for us. We are in positions where we can afford our monthly expenses … for now.

But that could all change literally tomorrow. That’s just the nature of today’s complicated real estate beast.

This is a guest column. Therefore, the views expressed in this article do not necessarily reflect the views of Foreclosure.com and/or its partners.

“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.

Fannie Mae was the first to make the move early last month. And according to a recent article in Business Week, the finance company has already “stopped about 20,000 foreclosure sales and halted 6,300 evictions of owners or renters this winter.”

Those are some staggering statistics for such a short time frame. But welcome news nonetheless for those who were able to take advantage of the assistance.

In addition to keeping people in there homes, the goal of the plan is to ensure that properties don’t fall into “disrepair.” The surge of defaults has had an unsightly impact on neighborhoods throughout the nation, knocking down home values and, in some cases, inviting trouble.

Here is a snip from Freddie Mac Chief Executive David Moffett:

“Keeping foreclosed properties occupied and in better repair will support local property values and promote a faster recovery in the housing market.”

Fannie Mae and Freddie Mac “own or guarantee about half of the $10.6 trillion in outstanding U.S. home loan debt,” which certainly makes this latest news a step in the right direction. Finding and creating ways to keep people in their homes is a good thing on so many different levels.

… is literally upside down, including everything inside it.

This is some rather clever construction; however it is certainly not the most practical home ever built.

In fact, according to an article from Reuters, the inverted residence is unsurprisingly more for spectacle than it is comfortable living.

Those who have visited the home have reportedly felt “dizzy and disorientated,” which is perhaps how countless homeowners here in the United States likely feel who are currently upside down on their mortgages.

Indeed, the current downturn in the real estate market has affected numerous borrowers nationwide who now owe the lenders more than their homes are actually worth.

The good news is that banks today are more willing to renegotiate loans for those who are in this type of situation to avoid tacking more foreclosures onto their books.

So if you can’t ride out this economic storm contact your lender sooner rather than later to determine any and all available options.

It will certainly make you feel a little lightheaded — in a good way — by relieving all that stress.

Legislation was introduced today in New Jersey that would create stricter requirements for mortgage solicitors in an attempt to reduce the growing number of foreclosures, according to the Herald News.

Currently in the Garden State mortgage solicitors — who are also known as loan officers or originators — need to fill-out a one-page form and fork over about $100 to issue loans on behalf of New Jersey lenders.

It’s not much in terms of applicant due diligence, considering families often plunk down hundreds of thousands to realize their dreams of homeownership.

And that’s the reason Trenton politicians and two state mortgage associations are throwing their support behind this bill.

Here’s a snip:

“… [the] legislation today that would require training, licensing exams and criminal background checks for loan officers. While mortgage-company owners must follow certain regulations, few of their employees do…. Many experts think the profitable commissions and low-education requirements for loan officers help contribute to skyrocketing foreclosure rates — as homeowners are pushed into mortgages they can’t afford.

Housing advocates stress that licensing requirements aren’t a magic bullet. Pending legislation in Congress and some state legislatures could do more to clean up the mortgage industry, they say, by holding lenders responsible for a borrower’s best interest.

According to the clip, as the housing market boomed over the last several years, the ranks of unregulated loan officers increased and flocked to the subprime market because these loans translate into big commissions.

In these cases, it appears that the mortgage servicers are looking out for their own interests rather than the homebuyers.

The moral of the story: Find a loan officer with a solid track record — one who comes highly recommended. Ask friends, family members Realtors® — anyone who has experience buying homes — about a trustworthy mortgage servicer.

It will pay off in the long-run … literally.

Bad — or unaffordable — home loans are no longer affecting unfortunate homeowners and lenders.

As the trend of more homeowners defaulting on their mortgages continues to increase, stock market investors are growing concerned with a possible “crisis in regard to subprime loans, according to U.S. News & World Report.

In fact, the Dow Jones industrial average tumbled more than 100 points yesterday, underscoring the impact the situation could have on the broader economy.

Here’s a snip:

“It’s stomach-turning time on Wall Street again. After plummeting more than 242 points Tuesday–and 416 points on February 27–the market began another downward march Wednesday on growing fears that the troubles in the subprime mortgage sector are turning into a full-blown financial crisis. And if there’s anything that Wall Street hates, it’s an unexpected crisis with unknown consequences.”

According to the article, an across-the-board rise in defaults and foreclosures means two things:

1. Consumers stop spending
2. Home prices could dip

And, according Merrill Lynch economist David Rosenberg, tightening lending standards might not be the silver-bullet solution.

Here’s a snip:

“Our biggest concern is that any tightening of lending standards in the mortgage market — even if confined to lower-quality borrowers — is going to constrain overall housing demand and make it more difficult for home sales and prices to stage a recovery.

We’ll continue to provide updates on this evolving issue … stay tuned.