For some time now, I -- and others here at WalletPop -- have argued that the Obama administration's mortgage modification plan has largely been a dismal flop, with many distressed homeowners unable to get even a temporary three month modification, let along the desired permanent fix that would keep them in their homes.

I have repeatedly argued here and elsewhere that just lowering a home-owner's interest rates a few months would do little good and maybe even do harm. The only real solution would be a change in the bankruptcy laws to allow judges the flexibility to actually lower the loan's principal. Banks objected. The President first seemed to back that fix but then apparently caved to lobbyists. Congress this month ended up nixing a measure that would have changed the law.



And now, the New York Times reports that not only is the mortgage modification program a "disappointment" -- to put it mildly, but that "some economists and real estate experts now contend it has done more harm than good."

How's that?

First of all, as the front page Times story reports, less than a quarter of all eligible mortgages have been modified for the three month mandated trial -- and, less than 1% (let me repeat that -- less than 1%!) have been permanently modified.

What that means, of course, is that the "modification" simply puts off the inevitable and we are likely looking at a growing number of foreclosures as we march through 2010.

Some lending institutions are reportedly better than others. But none will get any awards .

While JPMorgan Chase, for example, has modified about 31% of its eligible mortgage loans, according to the Times, Bank of America has only modified 15 %. American Home Mortgage only 6%.

Credit scores slammed

And, what lots of people apparently did not know -- and banks apparently failed to tell them -- is that if you do get a mortgage modification, even for three months, it can send your all important credit score into a nosedive.

Now, I know that some out there will still want to try and get a mortgage modification. But PLEASE go into this with eyes more than wide open! The figures clearly show your chances of getting a permanent "fix" are slim (and that would usually only mean a reduction in interest) and even a three month reprieve could cause your credit score to crash badly.

Charles Feldman is a journalist, media consultant and co-author of the book, "No Time To Think-The Menace of Media Speed and the 24-hour News Cycle."