Home Affordable Modification was launched by the Obama administration in March 2009 to help approximately three million homeowners avoid the dark clouds of foreclosures. More than a year from its launch, though, HAMP has kicked out more than half a million people from the program. And there’s much anger and frustration in the same people who placed their hopes in the administration’s flagship housing program.

In HAMP, mortgage servicers are to receive financial incentives for permanently lowering qualified homeowners’ monthly payments. To qualify, a homeowner will undergo three tests: (1) eligible hardship in paying monthly; (2) mortgages is 31% more than gross monthly income; and (3) banks will not lose more through mortgage modification as compared to foreclosure. After undergoing three months trial, homeowners should then have permanent modification to their mortgages.

Those who have successfully graduated to permanent status – totaling 435,000 – report a median 36% or $500 savings; this is via deferred payment of principal or lowered interest rate or extended loan’s term. Their number, though, is still lower than those who have been failed by the program – 600,000 (or maybe even more).

Aside from servicers misplacing paperwork and trial homeowners falling behind payments, the failure may also be attributed to the fact that the Treasury Department does not check if banks and other servicers are following the guidelines.

The Government Accountability Office cited a few examples:

1) A few homeowners have been making trial payments for six months or more but banks and servicers still haven’t come to a decision whether to make the payments permanent or not;

2) Those who are in similar situations may receive different decisions because 15 of 20 servicers do not follow federal guidelines; and

3) Treasury does not have penalties for violators and does not independently review borrowers’ application so as to make meaningful appeals for rejected homeowners.

Treasury officials come to their own defense, saying that the numbers alone cannot speak for the program. Though there are many who have been denied permanent modification, some of them have been able to acquire of private loan modifications from their servicers.

The State Foreclosure Prevention Working Group, though, that is hardly reason to rejoice. There are 40% delinquent borrowers who are not getting any help at all. And 75% of those with modified mortgages end up owing more than their original debt.

There is a lot of work to be done for HAMP to still work. Whether HAMP is still going to prove successful, only the next few months can tell.