Modifying mortgages is just a band-aid

[ben_meyers]

While I wish that there was a simple, easy answer, this article puts into words what I have been trying too say. Before you bark at me at least try and understand the complexity of the problem.

And oh by the way, sweet dreams.

Providing relief to current homeowners who are in trouble is a politically expedient move, but at the end of the day, prices are still far too high for the next generation of buyers – particularly now that lenders have reverted back to demanding hefty down payments and using more conservative underwriting standards. Which means that the current imbalance in supply and demand will remain a problem and help push prices down for years to come.

http://www.businessweek.com/the_thread/hotproperty/archives/2008/11/modifying_mortg.html?chan=top+news_top+news+index+-+temp_top+story

[flvegan]

1. Last paragraph sums it up best

"Policymakers probably know that, and their secret goal may be that the loan modification programs will help turn the current free-fall in housing values into a more orderly correction that plays out over years rather than weeks – and doesn’t take the broader economy down in the process."

This is precisely what it should do if done correctly.