The Obama administration's flagship effort to help people in danger of losing their homes is falling flat.

More than a third of the 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out. That exceeds the number of people who have managed to have their loan payments reduced to help them keep their homes.

Last month alone,155,000 borrowers left the program _ bringing the total to 436,000 who have dropped out since it began in March 2009. About 340,000 homeowners have received permanent loan modifications and are making payments on time.But analysts expect the majority will still wind up in foreclosure and that could slow the broader economic recovery.

A major reason so many have fallen out of the program is the Obama administration initially pressured banks to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.

Many borrowers complained that the banks lost their documents. The industry said borrowers weren't sending back the necessary paperwork.Treasury officials now REQUIRE banks to collect:

• two recent pay stubs at the start of the process.
• Borrowers have to give the Internal Revenue Service permission to provide their most recent tax returns to lenders.

Requiring homeowners to provide documentation of income has turned people away from enrolling in the program. Around 30,000 homeowners started the program in May. That's a sharp turnaround from last summer when more than 100,000 borrowers signed up each month.So far nearly 6,400 borrowers have dropped out after the loan modification was made permanent. Most of those borrowers likely defaulted on their modified loans, but a handful either refinanced or sold their homes.Obama administration officials contend that borrowers are still getting help _ even if they fail to qualify. The administration published statistics showing that nearly half of borrowers who fell out of the program as of April received an alternative loan modification from their lender. About 7 percent fell into foreclosure.

Another option is a short sale _ one in which banks agree to let borrowers sell their homes for less than they owe on their mortgage.

A short sale results in:

• a less severe hit to a borrower's credit score
• better for communities because homes are less likely to be vandalized or fall into disrepair.

Administration officials said their work on several fronts has helped stabilize the housing market. Besides the foreclosure-prevention plan, they cited government efforts to provide money for home loans, push down mortgage rates and provide a federal tax credit for buyers.for the full story click here:     http://hosted.ap.org/dynamic/stories/U/US_MORTGAGE_AID?SITE=VACUL&SECTION=HOME&TEMPLATE=DEFAULTCounty Properties, 24 years of brokerage experience, trust and a Member of the local Better Business Bureau! We offer free counseling in real estate regarding; home values and information on options of selling vs. Foreclosure.If you have equity in your home, we will sell your home and get top dollar in this challenging market at www.countyproperties.net/. If you do not have enough equity, and you must sell your property as a short sale we have the expertise to do so also and close escrow in 45-60 days or less. Learn more about mortgage relief options and how to take advantage of our FREE REALTOR (R)  CONSULTATION & ATTORNEY SERVICE.  or go to www.ShortSaleRealtors4U.comPlease feel free to contact me today for free counseling at (619) 301-0200 click http://www.shortsalerealtors4u.com/By the way…if you know of someone who would appreciate the level of service in real estate we provide, please call me or have them go to www.CountyProperties.net and I’ll be happy to follow up and take great care of them.