Obama's plan, intended to cut down tax foreclosure property listings, is dependent on voluntary modifications of mortgage interest rates by government-sponsored companies, Federal Home Loan Mortgage Corp. and Federal National Mortgage Association.

The anti-foreclosure plan is designed to help distressed homeowners remain in their homes by reducing interest rates to allow borrowers to make monthly payments of not over 31 percent of their income.

However, industry experts suggest that Obama's plan to streamline tax foreclosure property listings would not be successful unless mortgage lenders write down loan principal to reflect the reduced house market values.

They suggest that a 20 percent cut on loan principal will go a long way in helping distressed homeowners save their properties from tax foreclosure property listings. They also recommended lower mortgage rates, about one percent with additional two percent of profits for mortgage lenders, for homeowners who diligently pay their monthly loans to reflect the cost of funds of the Federal Reserve.

Industry experts believe that a new substantial mortgage measure could reduce write downs before filing of foreclosures and adding homes on tax foreclosure property listings.

They pointed out that a court-sanctioned mortgage write down could undermine market values of houses because every judge has the authority to modify loan principal as much as they think is suitable.

Additionally, court-sanctioned write downs would not be beneficial to mortgage lenders. For example, a bank that repossessed homes could end up losing about 40 percent in commissions, discounts and fees when it finally decides to resell distressed properties.

According to industry experts, a reduction of 20 percent on loan principals would be a bargain for both homeowners and mortgage lenders and would help in halting the growing tax foreclosure property listings.

Meanwhile, industry experts proposed combining the bankruptcy and write down provisions with compulsory counseling and screening. They hope that this approach would stem the tide of defaults which amounted for 57 percent of the loan modifications of both Federal National Mortgage Association and Federal Home Loan Mortgage Corp.

According to the U.S. Congressional Budget Office, about 350,000 owners of distressed properties are expected to file for bankruptcy to avoid paying their mortgages.