Have Loan Modifications Made Things Worse?

I would have to agree with this statement, “Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.  Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.”

If you are going to modify loans I think you must do a principle reduction along with 30 year fixed rates.  They need to stop offering 5 year Arm’s (adjustable rate mortgages).  If not, the banks are just postponing the inevitable.