More than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again, according to banking regulators. John Reich, director of the federal Office of Thrift Supervision office, said there is concern that the money spent on getting
homeowners out of foreclosure might be better spent on creating jobs. Many experts agree most government-sponsored loan modification programs are substandard, and provide little financial relief to borrowers. The new data raise questions about whether government money may be better spent on creating jobs, rather than averting foreclosures, said at a housing industry forum sponsored by his agency.
            The quality of the (modifications) are not what they should be, said Sheila Bair, chair of the Federal Deposit Insurance Corp. 
            The latest economic figures indicate that one in 10 Americans with a mortgage is either behind or in foreclosure, and more than 500,000 jobs were lost in November.  Nationwide, unemployment is 6.7 percent. About 2.25 million foreclosures are predicted this year.
            Mark Zandi, chief economist at Moody's Economy.com, said the public is likely to be more sympathetic to efforts to assist troubled borrowers, because the link between the foreclosure crisis and the sinking economy is increasingly clear in the midst of most Americans.
            "It's now in every corner of the country," Zandi said. "I think that people understand that this is a broader issue." 
            Since the $700 billion bailout of financial institutions prior to the November elections, consumers are realizing that talk of government foreclosure relief was just talk.  The Bush administration called for the
mortgage industry to modify loans.  However, there is nothing in the bailout package that would force banks to help homeowners get lower loan payments, as the program is purely voluntary. 
            During an interview that aired Sunday on NBC's "Meet the Press," President-elect Barack Obama declined to say how large an economic stimulus plan he envisions. He said his blueprint for recovery will
include help for homeowners facing foreclosure on their mortgages if President George W. Bush has not already acted when Obama takes office next month.