The Obama administration’s program has two parts: one to work with lenders to restructure the loan terms for up to 4 million homeowners; the second, to refinance up to 5 million homeowners into more affordable fixed-rate loans. For the loan modification program, borrowers who are eligible will have to provide their most recent tax return and two pay stubs, as well as an “affidavit of financial hardship” to qualify for the loan modification program, which runs through 2012. Homeowners are only allowed to have their first and second mortgage loans restructured once, and the loan relief program is only applicable for home loans that closed prior to January 1 2009, or earlier. Home mortgage loans for single-family homes that are valued more than $729,750 are not eligible for the federal loan modification plan.

There was also skepticism that mortgage lenders and banks would be willing to participate. “I’ve just seen so many of the refinancing and foreclosure prevention programs not work,” said Jason Cardiff, president of Kelly Media Group, a full-service marketing company that services mortgage lenders, law firms and loan modification companies. Cardiff continued, “Southern California borrowers with mortgages above the $700,000 loan amounts are not excited that they have been excluded from this financial relief funded by the recent stimulus package.” Mr. Cardiff was asked about the fairness of the mortgage relief bill and he responded, “No it’s not fair, but helping some borrowers is better than not helping any homeowners.”

According to the federal Office of the Comptroller of the Currency, 58% of mortgage loan modifications done in the first quarter of this year have re-defaulted, and fell delinquent within the first eight months of the year. Diana Olick, CNBC’s real estate correspondent, believes the government should let bad credit mortgage loans go into foreclosure instead of implementing mortgage relief.  She doesn’t believe that home loan modifications work and her idea is to get good credit borrowers who can afford the properties to purchase up the homes. However, Steve Liesman, CNBC’s senior economics reporter, said widespread mortgage modification is the key to fixing the foreclosure crisis.