Almost twice as many people dropped out of the government’s mortgage loan modification program in June as those who received permanent modifications, according to the Treasury Department.

There were 91,000 dropouts  in June, which means that 530,000 homeowners have left the mortgage program without a permanent loan modification, reported Reuters. Only 49,000 borrowers received permanent mortgage modifications, for a total of 389,000.

The Home Affordable Modification Program (HAMP) has been criticized for not helping enough homeowners who are at risk of foreclosure. The Department of Housing and Urban Development (HUD) and the Treasury Department released the Obama administration’s July housing scorecard this week and acknowledged the challenges with helping homeowners. 

HUD Assistant Secretary Raphael Bostic said in a statement: “The housing market is performing better than the predictions made over a year ago. We’re absolutely not claiming victory, but due to the Obama Administration’s efforts, improved home affordability is continuing to provide opportunities for prospective, qualified, home buyers, while promising neighborhood stabilization efforts are helping hard hit neighborhoods start to recover.”

The housing market is still struggling to recover and the numbers could mean that more foreclosures are on the horizon. If you find yourself struggling to hold on to your home, talk with a housing counselor as soon as possible to discuss your situation. Like many Americans you may not qualify for a permanent mortgage loan modification, but there may be other options that can help your situation.

If you are planning on just walking away from your home even though you might be able to afford it, a recent rule change by Fannie Mae may make you think twice about it.

Fannie Mae announced that they are changing the rules so that there is a seven year lockout for borrowers who are considered “strategic defaulters”.

WASHINGTON, DC — Fannie Mae (FNM/NYSE) announced today policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure. Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. Borrowers who have extenuating circumstances may be eligible for new loan in a shorter timeframe.

“We’re taking these steps to highlight the importance of working with your servicer,” said Terence Edwards, executive vice president for credit portfolio management. “Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time.”

In addition to the lockout period, Fannie Mae will take whatever legal action is allowed to recoup any unpaid balance of a loan as a result of a strategic default. So it is more important than ever to try to work with your servicer if you are having mortgage problems – and if you are one of those who cannot afford your monthly mortgage payment, there are also workout options such as a short sale or deed-in-lieu of foreclosure where you could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances.

Because I live in one of the “sand states” where many homeowners are finding that they have lost 50-60% of their home value since they bought it, I am constantly being asked questions about “whether or not you think I should walk away”.

And the real answer is… it is a very personal decision — and no one can really tell you what you should or shouldn’t do.

But it is becoming enough of an issue that 60 Minutes decided to do a story on it — and oddly enough, many of the stories they highlighted were right here in Arizona.

Now, one thing they didn’t cover in the story is that if you find that you are underwater in your house and are considering walking away – if you don’t make the decision today, the same decision will be in front of you for quite some time.

Home values are expected to rocket up anytime soon — and so if you find yourself in the situation where your home has lost a significant portion of its value since you bought it… only you can decide what is right for you in your individual situation.