Problems are underway for President Obama´s foreclosure prevention plan. Part of the plan involved giving judges the authority to modify loans (mainly by lowering the principal and making payments more affordable), in hopes of preventing bankruptcy and foreclosure. This puts more pressure on loan servicers to modify mortgages before the borrowers are left to file for bankruptcy, as they do not want a judge to be able to decide the terms. Representative Brad Miller, D-NC, remarked that "Reforming mortgage bankruptcy laws is the only remedy available that will provide the stick to go with the carrots that we have offered lenders to modify mortgages voluntarily,".

The problem is that servicers are greatly against this move, and as such it appears that the the House as well is divided; several Democrats have voiced concerns and it is feared that the bill would not pass the Senate with so many Republicans in opposition. To help support the bill, many administration officials are testifying at Congress to convince of the great value and necessity of the bill and to assure them that it would be used only when necessary.

Citigroup is in favor of the motion but several other key organizations are not. The head of the Housing Policy Council, John Dalton, commented that "This legislation will inject more risk into the housing and mortgage markets at a time when everyone is working hard to strengthen the housing market,". Others also feel that the move will only lead lenders to raise rates to ensure that they will not be hit harder later by unexpected forced changes in their mortgage contracts.

The Congressional Budget Office has estimated that over one million households could be helped if judges were allowed to modify loans. All borrowers/those in debt who would use this would have to contact their loan servicer about loan modification at least 15 days before filing for bankruptcy. A requirement may also be made saying that borrowers have to have been offered and accepted a loan modification beforehand. In the view of John Courson, the head of the Mortgage Bankers Association, "Judicial modifications should be a last resort and only available where other non-judicial options have been exhausted or not available,".