President Obama’s $75 billion mortgage relief plan isn’t working out so well.

The plan involves modifying homeowners’ mortgages on easier terms to avoid foreclosure.

As of Sept. 1, only 1.26 percent of all trial adjustments had been made permanent after three months, according to the Congressional Oversight Panel overseeing the financial bailout.

"No one is really sure why the conversion rate is so low," Mike Zoller, an economist at Moody's Economy.com, told CNNMoney.com.

"We're concerned these loans will eventually become foreclosures."

The way the program works is that delinquent borrowers get modifications for several months to make sure they can afford the new payments and to give them time to submit all their paperwork.

If they qualify for a long-term modification, borrowers can continue the lower payments for five years, and then the interest rate is fixed at the current level.

Servicers say borrowers aren’t giving them their paperwork, while homeowners say their loan servicers are losing it.

The program won’t prevent many foreclosures, Guy Cecela, publisher of Inside Mortgage Finance, told CNNMoney.

"Everyone is going to be shocked at the low conversion rates from trial modifications to permanent modifications."

Many experts say the housing rebound will end this year, as purchases spurred by the $8,000 tax credit for first-time home buyers fizzles out.

“We expect a little stall in 2010,” David Crowe, chief economist at the National Association of Home Builders, told CNBC.