A month after the Federal Reserve and other banking regulators encouraged lenders to help troubled borrowers avoid foreclosures through loan modifications, doubts are growing as to whether these programs can actually help substantial numbers of borrowers save their homes.

The practice, also known as loan mods, was developed to avoid foreclosures on more than two million adjustable-rate mortgages-approximately $200 billion-due to reset in the next 18 months. A lot of borrowers, however, are not good candidates for a modification because they were already defaulting on their loans before the resets. Meanwhile, many lenders are understaffed and unable to manage the demands of borrowers seeking modifications.

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