It ain't easy.

When it comes to loan modifications, you can't really talk about success or failure, IMO, because it's a people story.

If your loan mod worked, great. The program's a success, and you know what? Just over 75% of people are current on their mortgages.

Which means that just over a quarter of the people are behind in their payments, even after the loan has been modified.  Have a look at this article from Reuters.

So few troubled loans have been modified that no one can say if the plan is working. A deed-in-lieu might be an option down the road (see Dec. 3 post), as part of the short sale guidelines recently announced.

Still, a loan modification is probably the first step for people behind in their mortgage payments.  A short sale is the second-to-last step.

Would foreclosure ever be an option? The answer is...yeah, maybe.  If someone loses his job and quits making the payments, chances are he's behind on other accounts and his credit is already trashed. Avoiding foreclosure may not make that much difference one way or the other if a person is really desparate.

While it's hard to counsel people to quit paying their mortgages, the fact is that thousands of people can't make the payments. Taking advantage law on the books--foreclosure statutes--allows you to live almost for free until the house goes to auction.