The ˜Making Home Affordable' program was launched by the government back in March with a $50 billion budget to help struggling homeowners save their homes.

Last week the Obama administration expanded the program, announcing new initiatives which, it is hoped, would aid homeowners in preventing a foreclosure if they do not meet the current program criteria.

The new measures are geared toward streamlining the home sale process when a homeowner owes more than the current market value (by way of short sale), or the transfer of ownership of a home to the lender (by way of Deed-In-Lieu of foreclosure).

As you may expect, both options will have a negative effect on the homeowner's credit, but not as much of an impact as would a foreclosure.

Since March when the program took effect, mortgage companies have provided over 55,000 modification offers to homeowner's nationwide.

"We're seeing a lot of progress in a very short period of time," Timothy Geithner, Treasury Secretary said.

With that being said, the number of new foreclosures far outweigh the modification success stories and the housing credit counselors across the nation are inundated with a huge influx of troubled homeowners complaining that the program has been slow getting started.

As you may expect, mortgage companies, like housing counselors, are overwhelmed with borrowers' eagerness to become a part of the plan, but many companies have had to build up their staff with entry-level employees who appear to be steering borrowers away from the program or are just unaware of the plan.

Thus far, 14 companies have signed up for the plan, who serves approximately three quarters of the mortgage market. 

The homeowner has two new options to avoid foreclosure;  they can sign over their property title to the lender for what is referred to as a Deed-In-Lieu of foreclosure, or they can do a "short sale" where the lender may allow the homeowner to sell the property for less than the current mortgage balance.   I am still not sure why the Obama administration is calling the options "new", as they have always been in existence.

As compensation for coming to an agreement with borrowers, the mortgage lenders would get up to $1,000 and borrowers would receive up to $1,500 in relocation costs.

Survey of Potential Home Buyers Shows Many Looking To Buy Foreclosures

A report recently released by Trulia (a real estate search service) indicates that 55 percent of potential home buyers surveyed were at least ˜somewhat likely' to purchase a foreclosed home, up from numbers the service released for November.

On the other hand, 40 percent of those survey respondents seem to be delusional, expecting to pay at least 50 percent less for a foreclosed home, compared to the 31 percent discount expected back in November.

Of those surveyed 85 percent of respondents are concerned with the negative aspects of buying a foreclosed home, up from 80 percent in November.

The number one drawback to buying a foreclosed home appears to be hidden costs associated with buying a foreclosed home, followed closely by the associated risk and concern that the home will lose value.

As a result, 83 percent believe they should receive at least a 25 percent discount in exchange for the risk of purchasing a foreclosed property.

Rick Sharga, senior vice-president of RealtyTrac stated:  "Although consumers are aware that there may be some challenges involved in purchasing a foreclosed home, they are very interested in the bargain opportunities available in the foreclosure market."

He went on to state, "People want the best deals they can find and they are willing to go outside of their comfort zones if it means they can buy more home for less money."

The survey went on to point out that younger prospective homebuyers appear to be the most interested in foreclosed homes, with two-thirds of those aged between 18-44 willing to buy a distressed property, versus just one-third of those 55 and older.

Also of interest, current renters also expressed more interest in purchasing foreclosed homes, with 68 percent more likely to buy such a property versus just 49 percent of current homeowners.

It will be interesting to see how these survey numbers pan out over time as home prices will likely continue to drop.