As Congress jousts over the effectiveness of the stimulus package to stir economic activity, it’s worth noting that homeowners — whose troubles are at the root of the economic crisis — continue to struggle. Nearly one-fourth (23 percent) of mortgage-paying homeowners nationwide now owe more on their homes than the property is worth, according to a report released yesterday by Zillow.com. And that number is projected to jump to as high as 30 percent over the next year, the group warned. Here’s part of the statement from Stan Humphries, Zillow chief economist:

Reports of increasing mortgage defaults signal that foreclosures are likely to increase again and peak in mid-2010. With increasing unemployment and high rates of negative equity, we have a fertile breeding ground for even more foreclosures, which add to the already-high level of for-sale inventory that needs to be cleared before values begin to rise.

Last week, the Treasury Department released the latest figures surrounding its efforts to entice mortgage servicers to modify loans voluntarily, revealing that more than 230,000 mortgages are in trial modifications under that $75 billion program. The administration says it’s on pace to alter 500,000 loans by the start of November. Yet as The New York Times pointed out earlier in the week, the effort is hardly keeping pace with the rising number of foreclosure filings, which topped 336,000 in June alone, according to RealtyTrac.

On top of the pace, some servicers are using dubious modification tactics, like forcing homeowners to waive their legal rights when they agree to the changes. Also, most servicers are reducing their rates, but not the principal balances of the loans. The result is that homeowners have little chance to build equity — and therefore little incentive to fight to stay put. From the Times:

With home prices falling, a better way to avoid redefault would be to forgive principal. In apparent deference to banks that do not want the losses associated with principal reductions, Obama officials have not pressed lenders to adopt that approach.

Democratic leaders in both the House and Senate have warned that, if the voluntary modification program doesn’t pick up speed, they’ll push for the return of legislation empowering homeowners to escape foreclosure through bankruptcy — a measure killed by the Senate in May April. Of course, roughly 1 million more homes are projected to foreclose in the meantime.