The plan was supposed to help more than 4 million homeowners by guaranteeing loans through Freddi Mac and Frannie Mae; other citizens in need were meant to benefit from the $75 billion in incentives given to providers in order to administer mortgage modifications.

However, the plan, so far, has had some problems.

Though 190,000 mortgage modifications have been made, more than 1 million more homes are still being fed to the wolves, with lenders closing in on foreclosure proceedings faster than borrowers who wish to participate in the Obama program can close in on their own deals; 20% of these homes have already been repossessed.

In fact, many participants have complained of lengthy backlogs and delays, as well as mistreatment from lenders–including being given inaccurate information and having their phone calls unreturned. Others simply report being denied help, period.

Banks are taking as much as 45 to 60 days to respond to homeowner inquiries to the program–a time period during which most could easily lapse on payments, starting a foreclosure process that the very program should be able to prevent. There are even homeowners who have been waiting for nearly half a year on new payment arrangements and continue to remain without answers.

Perhaps this plan should have called for a little enforcement?

Another 2.4 million Americans are at risk of foreclosure, according to the Center for Responsible Lending; 8.1 million more could stand at the same precipice within the next four years.

In regards to these complaints, new modifications may be in the works for the program. Let’s cross our fingers that “banker accountability” will be included within the wording.

The number of people applying for U.S. mortgages continues to fall, hitting a level lowest since November last week. According to the Mortgage Bankers Association, application rates have fallen over 7% since the previous week, creating an overall decrease of 16% decrease in the index of applications for purchase or refinancing.

According to Tom Porcelli, senior economist at RBC Capital Markets in New York City, higher rates are directly to blame. “Higher mortgage rates will keep ‘refi’ activity under pressure. That removes a source of what some had hoped would be an added kicker to consumer spending,” he says.

Average interest rates for 30-year fixed-rate mortgages are now at 5.57%, and rates for 15-year fixed-rate mortgages is 5.1%.

At least 60% of the business bankers are seeing these days is in the refinance area rather than new sales.

Of course, the highest rate of unemployment in 25 years isn’t helping, either. Mark Goldman, a real estate lecturer and mortgage broker, says he’s not optimistic about this year or 2010.

“Employment is still bad, wages are still low, interest rates are up. That’s going to hurt the housing market,” he says, adding that the rise in mortgage rates cuts buyer purchasing power by 10%.

President Obama has noted that the unemployment rate may rise to 10% nationally, and that he is creating an agency to oversee mortgages as well as other consumer products, such as credit cards. The federal tax credit of up to $8,000 for first-time home buyers also remains in effect.

A nonprofit organization, AHF was founded in 1989 and runs over 13,000 residential units and specializes in work force housing. Though this service has helped many low-income individuals and families secure a place to live, it, like many housing businesses today, is apparently not without controversy.

Many may recall that the Amarillo-based company had some disputed funds in question this year–”some” meaning over $38 million.

On April 1 of this year, AHF President and founder Steve Sterquell died in a car accident which was later ruled a suicide. After Sterquell’s death, investors and lenders closed in on the company quickly, filing court papers to force AHF into bankruptcy.

Apparently, Sterquell left quite a bit of this money behind to his family in a shady life insurance policy. By filing on their own, AHF hopes to end the largely public dispute, cooperate with the investigation and still maintain their properties.

“They can get control this way. It’s better than people shooting darts at you every day,” says Charles White, one of AHF’s attorneys.

It seems the company is doing what they can to settle what perhaps was the fault of a single man. This is by no means a unique situation; new cases against housing and mortgage providers, as well as their CEOs and other leaders, are being filed on nearly a daily basis.

But it’s cases like these, where–on the surface, at least–the company overall seems to have been at least trying to provide respectable, honest business for low-income, senior and student residents, that really pull at your heart. Must we condemn an entire business over one man’s mistakes?

Rates are now the highest they have been seven months, with the average 30-year fixed-rate mortgage at 5.59% and 15-year fixed-rate mortgages at 5.06%. Both of these numbers are still lower than last year’s rates at the same time.

That said, with the economy still in turmoil and the unemployment rate near a whopping 10%, these rates aren’t much of an incentive for today’s buyer.

Freddie Mac vice president and chief economist Frank Nothaft said that the increase was attributed to seemingly good news. “Mortgage rates followed the increase in bond yields this week as the May employment report showed that the economy lost fewer jobs than the market consensus had expected,” he said.

So even though almost 1 in 10 workers is jobless at the moment, rates are still going up simply because it could have been worse but wasn’t? What’s next, putting off H1N1 vaccine development until a number of people are infected–or die–that’s worse “than the market consensus had expected”? If we ran the nation like the housing market, pure chaos would surely ensue.

Without these lower rates, there isn’t much left to make people eager to go a-home-buying–especially if they know that their jobs are, or could be, in jeopardy. The big question is–aside from just how high rates will continue to rise–how are providers planning on enticing new buyers now?

“The worst is to come. .. typically, there’s a lag between when the economy softens and when defaults actually occur… Like all firms that hold these kind of mortgages, we’ll have some issues,”said Steven Kandarian, chief investment officer at Metlife Inc.

Kandarian says that once the current economic crisis ends, commercial mortgage delinquencies will still rise for two to three years.

Mortgages of U.S. banks, for example, are expected to rise in default rate by up to 4.1% due to lack of refinancing sources and rent issues from the depression. This increase would be the highest default rate for commercial mortgages in seventeen years, resulting in a lapse totaling $44.3 billion.

Of his own company, Kandarian says delinquencies will be small.

Given that rates are already at a fifteen-year high, if these projections do prove to be true, the worst is indeed yet to come for commercial property owners. And as these are default rates rather than delinquencies–where payments are behind three months rather than one–overall companies in trouble with delinquent payments aren’t even factored in.

Commercial loan service providers are stepping in to help, seeking loan extensions for maturing loans to keep businesses occupying their offices–and not defaulting on their loans.

Their requests are not falling on deaf ears. The Treasury is considering creating new debt-restructuring rules to help these businesses, which would help both those who are struggling as well as those who are delinquent on making payments.

Sure, the Obama Administration has helped over 55,000 homeowners so far; but the Center for Responsible Lending estimates that there are 6,500 new foreclosures filed daily–or one every 13 seconds. These aren’t great odds in the least.

Homeowners facing foreclosure are not alone in being affected, either; 70 million households nearby these foreclosed homes are losing property values, totaling about $7,200 per family–or $502 billion overall. That’s quite a nationwide cut, totaling a $2 trillion property value loss within the next three years.

Though 12% of mortgages are currently delinquent, some say that the recession is at an end. ABC News reports that “number of homes under contract for sale in April is up 6.7%” among other, non-housing factors. But will that fact reverse now that fixed rates are increasing?

Following the rate hike last week, applications for new mortgages dropped by 16%. Perhaps that negates April’s statistic?

And others speculate that there is a second mortgage crisis yet to even begin. Doug Hornig of The Daily Reckoning depicts a pretty gruesome picture about non-subprime loans and the crisis he says is sure to hit by May 2010. And while it may not be as bad as the current crisis, Hornig warns that it will last longer.

So is there true hope for American homeowners somewhere between these bleak numbers and reports? Can the Administration that used the word so often during campaigning actually now use it in able to save the American people from poverty and homelessness?

We’ll just have to wait and see.

It’s no wonder that over 5% of borrowers are now behind on their payments–and have been for two months or more. And if rates keep moving on up, ability to pay will certainly decrease at a similar steady rate.

Proof of that is evident in the number of loan applications that have crossed lenders’ desks. In fact, the application rate is now the lowest its been since early March.

Though the increase differs by state, it doesn’t look good across the country. There are even predictions that a 6% rate could be in the not-so-distant future, further destroying many white picket dreams even before they begin.

Delinquencies are especially high in Nevada, at just under 12%, followed by Florida at 11%. The lowest delinquency rate is currently in North Dakota at 1.5%.

Has the American Dream come to an end? Is the age of the apartment, the flat, and the condo upon us? After all, what good are lower prices if rates simply continue to grow?

Maybe the dream has died for some, but it’s still possible to lock in lower rates. It does take a decent credit score and some work, however–and credit scores aren’t exactly running high these days. In fact, the national average is just one point above the score needed for an FHA loan–and even with that, buyers will still be paying a heavy price.

Though the government has been making valiant efforts to curb the crisis, it seems that job losses are simply stronger than the government. Even so-called reliable borrowers with the best credit ratings are experiencing difficulty with payments–and even foreclosure.

The delinquency rate overall is just over 12%. At this time last year, it was 8%.

There’s another first for the banking industry as well: prime loans, typically safe, resulted in the largest percentage of foreclosures, at 49.8%. Another 43.2% were subprime loans. This is an indicator that the recession, and job losses, are hitting the housing market hard, and are perhaps to blame rather than loan providers in many cases.

That said, mortgage rates themselves are pushing down heavily upon the average homeowner. Rates are as high as 5.5% this week, creating a need–or at least, an incentive–for at least half of U.S. homeowners to refinance. These increases are attributed to investors’ concerns over growing government debt.

Even with this increase, rates are still lower than last year’s 6.08%. Still, a rise at all can threaten many homeowners today, as well as potential buyers–especially those who have lost, or fear they will lose, their jobs. And though government intervention may help once applied across the board, it cannot control long-term interest rates.

56% of the housing crisis is occuring in just four states–California, Florida, Nevada and Arizona. The highest rate, however, is currently in New Mexico, at 5.59%.

Though they’ve cast off the newly unpopular name, Bank of America still defends the former Countrywide, stating that one of the most recent lawsuits filed against the company is without merit and that the corporation “intends to vigorously defend the case.”

This case, a class action lawsuit, is in regards to Countrywide allegedly goading buyers into risky, unaffordable subprime mortgage. The company has also been charged with violating federal conspiracy and racketeering laws, in addition to state laws that prohibit these actions explicitly.

Though Bank of America may be defending what’s left of Countrywide’s honor until it’s hoarse, federal judge Dana Sabraw of San Diego said today that borrowers have a case–and may proceed to sue Countrywide.

Former CEO of Countryside Angelo Mozilo is also facing several lawsuits–including those filed by stockholders and multiple states. Many of Countrywide’s employees have gone on to create a new real estate investment company, PennyMac Mortgage Investment Trust, a company that plans to capitalize on home loans that are currently suffering.

The largest lender in the nation prior to being whisked away by Bank of America for $2.5 billion in stock nearly a year ago, it seems that Countrywide has lost its esteem in the eye of the American people, and is nothing more than a passing name–except, of course, on the court docket.

Six in Dallas sent to federal prison for fraud. Three in Kansas City pled guilty for a $12.6 million conspiracy. Brokers in Minnesota, Detroit and Florida have all been faced with charges and indicted.

This list goes on and on. In face, Certified Mortgage Banker and attorney Rachel Dollar is running  the Mortgage Fraud Blog, reporting new cases nearly every day. And it seems that while we hear of these predators being caught each day, the mortgage crisis continues and it’s the American people, not two-bit fraudulent scammers, who are paying the price.

In this light, Senator Patrick Leahy’s anti-fraud legislation has arrived just in time. Signed into effect by President Obama on Thursday, this bill calls for stronger laws against banker and broker fraud as well as increased resources to pursue these cases. Expanding on current legislation, it will also cover financial organizations that are not insured or directly regulated by the government.

“Government must set the rules of the road that are fair and fairly enforced. Banks and lenders must end the practices that added to this mess,” said President Obama upon signing the bill.

Meanwhile, to protect themselves against fraud, Freddie Mac fraud experts recommend that borrowers beware. To do this, visit the Making Home Affordable website to check the legislation for yourself, and avoid services that make empty promises or utilize documents filled with blank spots or errors.