Mortgage foreclosures are on the rise in spite of loan modifications and the myriad of government programs mandated to rescue Americans from losing their homes. In February of 2009 President Obama presented a $275 billion stimulus bill to Congress to aid ailing Fannie Mae and Freddie Mac government loan guarantee agencies. The Obama administration also set in place a program of incentives to loan officers to save Americans from losing their homes. The program offered a $1000 incentive payment per loan officer if able to keep Americans in their homes with loan extensions, payment plans and overall loan modifications. Realtors were given the impetus to sell new homes with a promised $8,000 rebate on new home loans. The program expires the end of November, 2009.

With these multiple programs to get Americans from under mortgages where the value of the home was now less than the equity, the foreclosure rates on homes nevertheless increase. The housing dilemma may be tied to the unemployment rate that is about to reach 10%. The Political Associated Press reports that foreclosure rates are grown to such proportions that the government's effort to rescue the housing market looks diminished. From July 2007 to August through the end of August 1.8 million homes have been lost through loan defaults and foreclosures. To ease the public outlook on foreclosed homes, Realtors are no longer listing publicly defaulted loans but are only listing foreclosure. Before the bleak housing market with the mortgages considered to be under water because the loans are more than the value of the house, Realtors had been publicly listing defaulted homes.

The end of August saw the start of the processing of 5.2 million of home foreclosure according to the Associated Press. The Treasury Department has stepped in to help save 500,000 houses from foreclosure. The Treasury Department has met its goal of saving 500,000 houses from foreclosure as of November 1, 2009 with the processing of what is called trial mortgage modications. Congress was not critical of the Treasury Department efforts but noted the overwhelming job it had of mortgage modification of 500,000 mortgage loans.

Political critics have noted that the high jobless rate are even pushing credit worthy borrowers with prime mortgages into home loan defaults. The housing market itself in an effort for sustainability has stated implementing new home loans called the pay option adjustable rate mortgage and interest only mortgages. These two types of home loans will only reset the high interest rates of present day home loans. The new rates will be variable but because of the type of mortgage loans will have high interest rates. The common term for these types of pay option adjustable rate mortgages is "exotic" mortgages. The government will not be able to bail homeowners out of these exotic mortgages because the mortgage rate is so high. These exotic will not qualify for any government modification program. Most of the government housing programs started by the Obama administration are for first time buyers.

Without loan modification government programs, it will be difficult to save homeowners who owe more than the actual value of the home. Home equity loans used to be the helpmate in these housing situations but there is no equity in a home where the balance of the loan is more than the value. These type of under water mortgages account for one third of the housing market. The increase of these type of mortgages can be increased to as much as one half of the housing market if housing prices continue to drop. Housing experts are saying that if unemployment does not improve or if these homeowners are beset with other financial difficulty, they may have no other choice but to walk away from their homes. These former homeowners may find financial solace in living in smaller premises without a mortgage such as an apartment or a condominium. In that scenario, homeowners will be walking away from over sized mortgages because of no other place to go.

According to Standard & Poors, a financial reporting firm, the housing market may just bottom up. The company reports that the housing markets pricing have been showing a steady improvement since March of 2009. There is speculation that the economic stimulus plan is set to start working the latter part of 2010 or early in 2011. At that time, the American economy is expected to recover which would cause the housing market to bottom up as speculated. Economists are admitting that however minute,the housing incentives such as the housing rebate has helped the housing market prices.