President Obama's Homeowner plan is about eighty-five percent a good plan but the fifteen percent flaw is a fatal flaw. The crux of the issue here is that the Federal Government is going to be spending tens of billions of dollars of tax payers monies to obtain loan modifications for hundreds of thousands if not millions of American homeowners but the loan modifications will be only temporary, only for five years. This is super stupid; it is stupid because it is wasteful with taxpayers money if the government is going to spend this large amount of money it should solve the problem with these mortgages and this is a foolish course because it just postpones the problem for a later day when five years rolls around and these loans begin resetting and these homeowners are faced with significantly higher mortgage payment the country is going to see a wave of defaults and foreclosures which at best will put the vital housing and real estate industries in real danger of having serious problems. The U.S. government should require for loan modifications to be eligible for this plan the interest rate reduction has to be permanent unless the reduced interest rate is below the prevailing 30 year fixed rate at the time of the loan modification which in that case should result in the lender being permitted to after the five year period raise the interest rate to that prevailing interest rate figure. The Administration deserves a lot of credit for incorporating in their plan the lessons learned over the last twelve months in the country trying to solve this problem, namely in part, loans not only have to be modified but they have to be modified in a manner that lowers the burrowers monthly mortgage payment and a moving incentive has to be given to lenders to motivate them to modify mortgages. Although, the President Obama administration has essentially said that this plan isn't the last word on initiatives to solve this problem they really need to address a monumental part of this problem. On this how does the nation stop the foreclosure crisis how does the nation keep widespread defaults from occurring on home mortgages problem, the grand canyon size portion of this problem is how does the U.S. government empower loan servicers to do the right thing, the obvious sensible thing. The huge specific problem is that loan servicers are paralyzed to reduce the principal on loans when the market value of the home is significantly below the current principal on the loan which means if the home was foreclosed on and the home was sold for market value which is obviously the best realistic outcome from the lender's perspective the lender still won't get the current principal returned to the lender. The obvious step here is for the Administration to get together with the Federal Reserve Board and jointly request from Congress that they pass laws empowering loan servicers to be able to modify loans in the obviously sensible manner. Specifically give loan servicers the power to modify home loans to reduce principle, interest rate, fees and penalties in obvious manners where any responsible fiduciary would agree is the right thing to do and prtoect these loan servicers from legal liability. Obviously, the Congress is going to have to act to change the bankruptcy law to allow bankruptcy judges the power to reduce principal on home loans to market value like the bankruptcy judges currently do on any other personal secured loan and that is the perfect time to also make laws giving loan servicers this sensible and reasonable power, this power can just be limited to these extraordinary times where the counrty is in the worst or second to worst recession it has seen in the last seventy-five years.