Well, according to the data that was released on Friday, only about half of the loan modifications that made to the end of the year actually reduced payments by more than 10%. This data comes from the Office of the Compiler of the Currency and the Office of Thrift Supervision. They apparently analyzed nearly 35 million loans worth more than $6 trillion.

President Obama’s $75 billion plan to promote loan modifications is mainly for the average homeowner and does not provide for commercial loan workouts. Although, there are just as many commercial loan defaults, in comparison, as there are home loan defaults.

This report also states that many of the loans that were modified are also falling back into default. Many people believe that this is because of the lending industries unwillingness to be generous despite regulators attempts to influence them. As it is, 1 in 4 modifications actually increased monthly payments in the fourth quarter of 2008. It is believed the reason for this is that lenders are adding fees or past-due interest to the loan and spreading them out over the 30-40 year period.

This means that after nine months 26% of the loans that were modified and were dropped by 10% or more in the size of their payment, fell back into default. It is possible that less would likely fall into default if the monthly payments were reduced even more. Maybe they should get a special servicer to help them work this out.

However, there was some positive news to come out of these loan modifications in 2008. By the end of the year that 25% had increased to 37% of loans with payments lowered more than 10% that resulted in less going back into default.

Lenders such as Bank of America Corp., J.P. Morgan Chase & Co. and Citigroup Inc. have realized that home and commercial loan defaults will decrease as they realize that more permanent changes are needed to get borrowers back on track.

The truth is, only time will tell if lenders will be willing to sacrifice certain things in making loan modifications that will help the borrower retain his or her home.

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