EARLIER THIS WEEK

, the Bush administration announced yet another effort to bail out struggling homeowners. Dubbed "Project Lifeline," the plan aims to help a previously-ignored segment of the population: those who are severely delinquent on their payments. At best, however, the plan offers a very minor fix to a very major problem.

Backed by six of the industry's largest lenders, Bank of America, Chase, Citigroup, Countrywide, Washington Mutual and Wells Fargo, Project Lifeline will give homeowners who are delinquent on their loans by 90 days or more a 30-day reprieve on foreclosure proceedings. The goal is to allow them additional time to work out a payment plan with their lenders and keep their homes. While few details are available according to documents provided by the participating lenders, a homeowner's eligibility will be decided on a case-by-case basis the plan notably stipulates that it will reach out to prime and Alt-A borrowers, who were excluded from the Bush administration's "teaser freezer" plan announced in December.

Housing advocates, however, are far from optimistic that this new initiative will really help the millions of homeowners facing foreclosure in the years ahead. "The plan is widened to include people who are seriously delinquent. That's good and should have been done months ago," says Jim Carr, chief operating officer at the National Community Reinvestment Coalition, a consumer group. "Will it help some people? Yes. But will it be a significant step in resolving the crisis absolutely not."

The biggest snag is the limited 30-day window that homeowners have to seek help from their lender. "It perhaps gives servicers a little more time, and probably a prodding to borrowers to contact them," says Guy Cecala, publisher of Insider Mortgage Finance, a trade publication for the mortgage servicing industry. "But in the grand scheme of things 30 days is not enough to solve a mortgage problem."

Typically, when housing counselors and homeowners negotiate loan modifications it can take weeks, if not months to reach a solution, says Diane Cipollone, an attorney with Maryland-based consumer group Civil Justice, who helps homeowners and housing counselors speed up loan modification cases that have hit a roadblock with servicers. The process requires a frustrating daisy chain of phone calls and time spent waiting for approvals from higher-ups. And all too often, the borrower sends all requested information to start the modification process and the lender fails to respond. When contacted again, the lender says they have no record of receiving the documents. "You have no choice but to re-submit," she notes.

And if understaffing was a concern before, it's even more of a problem now, as a growing number of homeowners seek help. Loan servicing operations are almost completely automated and not set up to handle calls from thousands, if not millions of homeowners whose situations are reviewed on a case-by-case basis, Cecala explains. He estimates servicers would have to handle roughly 8,000 calls a day in order to help all borrowers who need it. "You can't hire enough people to do it and you're not motivated to hire people to do it because you're not getting paid," he says.

Further complicating the situation is that servicers have to get the approval of the investors who own the loans. Each loan is sliced into securities owned by multiple investors some more willing to allow modifications and repayment plans than others, Cecala explains.

John Rao, an attorney with the National Consumer Law Center, points to the sluggish progress of the original "teaser freezer" plan as a way to gauge the potential success of Project Lifeline. He questions whether these new initiatives are anything more than a public relations effort on the part of the lenders. "Every time we say things are still not happening, all [the lenders] say is 'Oh, there's this new plan, give it time,'" Rao says. "It seems to me that at this point we've given them quite some time and they've got very little to show for it. I guess you can expect every couple of months a new plan [to be introduced]. And it just tries to deflect negative criticism of the previous plan."

The mortgage industry has yet to release statistics on the success of the Bush administration's teaser freezer plan. The latest numbers issued by the Mortgage Bankers Association, however, paint a grim picture. In a survey of 33 million loans, roughly 62% of all loans outstanding, the MBA found that during the third quarter of 2007 (before the first plan was introduced) lenders completed 54,000 loan modifications and 183,000 repayment plans, while initiating almost 385,000 foreclosures. Almost one in three (29%) of these foreclosures involved borrowers who had established a loan modification or repayment plan with their lender then became delinquent again.

"If those households were put into affordable long-term loans, we would be en route to solving the problem" Carr says. Instead, the majority of homeowners who were offered a repayment plan, which helps a homeowner catch up on missed payments over six or 12 months, were kept in the same, likely unaffordable mortgage. "How that helps homeowners is a mystery," Carr says.

In his speech introducing Project Lifeline, Treasury Secretary Henry Paulson summed it up best. He noted that the administration and the HOPE NOW alliance (a coalition of housing counseling organizations, loan servicers and other industry participants that are at the helm of this initiative, as well as the teaser freezer plan) continue to look for additional opportunities to avoid preventable foreclosures. "However, none of these efforts are a silver bullet that will undo the excesses of the past years," he said.