Every layperson will tell you the same thing: the administration’s Making Home Affordable program is failing to stem the tide of foreclosures. Not only are voluntary mortgage modifications lagging in the face of ever-rising foreclosure figures, but the modifications offered by lenders fail to meet the program’s own requirements, not to mention the needs of the borrowers. The program itself introduces new barriers to the already burdensome process of obtaining a loan modification. Unfortunately, this program represents government at its worst: cumbersome, tedious, expensive and, as it is turning out, useless.

At a recent hearing before the House Financial Services Committee Subcommittee on Housing and Community Opportunity, Congressman Barney Frank of Massachusetts fired a warning shot across the bow of mortgage servicers everywhere: shape up, or watch us pass cramdown legislation, Frank said. Legislation that would allow bankruptcy judgtes to modify mortgages on primary residences is becoming increasingly relevant as reported problems with the program surface.

Tongue in cheek, Congressman Frank said, “The best lobbyists we have for getting bankruptcy legislation passed are the servicers who are not doing a good job of modifying mortgages. And if they do not improve their performance, they improve the chances of that legislation.”

Representatives from the administration testified, however, that while there is room for improvement, the program is on track to meet its goal of assisting 3 million to 4 million borrowers over a period of three years–and a ramp-up period was expected. Forty-eight servicers representing more than 85 percent of the market have signed contracts with the administration. Through August 2009, servicers have extended more than 571,000 loan modification offers, and 360,000 modifications are in the trial period required before the modification becomes permanent.

The problem, however, is that even when operating at full capacity, the program will address no more than one-third of all foreclusres. Consequently, between 2009 and 2012, more than nine million families are expected to lose their homes to foreclosure.

The legislation is failing miserably. This is the reason we advocate the prompt passage of Chapter 13 mortgage cramdown legislation so that the homeowner can finally obtain some meaningful assistance.