As reported in today's Boston Herald (Broader response to foreclosure crisis urged):

More than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again, banking regulators said Monday.

hmmm....

The new data raise questions about whether government money may be better spent on creating jobs, rather than averting foreclosures, said John Reich, director of the federal Office of Thrift Supervision office at a housing industry forum sponsored by his agency.

"I do have concerns about allocating federal resources" Reich said.

The government’s data don’t include enough detail about the types of the loan modifications that were made, said Sheila Blair, chairman of the Federal Deposit Insurance Corp. "The quality of the (modifications) are not what they should be," she said.

Ok - so clearly more data is needed, but the initial information is not showing hopeful signs that modifications can do anything but delay the inevitable.  But I do still think that foreclosure prevention must be part of a broad economic plan, if it's done right.  Others agree:

"We need a bottom-up approach, in my view, by modifying people’s mortgages and helping them stay in their homes," said New Jersey Gov. Jon Corzine.

Corzine called for a three to six month halt to foreclosures while the government works out a more aggressive plan.

Mark Zandi, chief economist at Moody’s Economy.com, said the public is likely to be more sympathetic to efforts to assist troubled borrowers, because the link between the foreclosure crisis and the sinking economy is increasingly clear to most Americans.

How clear that link really is for most people, I don't know....but it looks more and more likely that Obama will include more help for defaulting borrowers than what is currently being done:

During an interview that aired Sunday on NBC’s "Meet the Press," President-elect Barack Obama declined to say how large an economic stimulus plan he envisions. He said his blueprint for recovery will include help for homeowners facing foreclosure on their mortgages if President George W. Bush has not already acted when Obama takes office next month.

We'll see....

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