The Associated Press recently reported that more people are dropping out of the Obama administration’s loan modification program — a sign, experts say, that foreclosures will rise and cause further damage to an already weakened housing market.

The Treasury Department says that, of the 1.3 million homeowners who enrolled in the program since March 2009, 530,000 borrowers — more than 40% — have left the program as of last month. The figure outnumbers those who are staying in the program. The Treasury Department estimates that 390,000 homeowners, or 30%, have stuck with the program; the agency further says that those in the program have received permanent loan modifications and are making their payments on time.

In March 2009, in order to stave off the rising tide of foreclosures, the Obama administration pumped in $75 billion in a government program to help struggling homeowners pay their mortgages. Under the program, those with an outstanding principal balance of up to $729,750 are eligible.

The Treasury Department argues that only a few of these borrowers will end up in foreclosure. But with weak job numbers, fewer people buying a home and no other financial incentives from the government to spur home purchases, it will be just the opposite: more foreclosures and a lag in the housing market that could last for months.