by Calculated Risk on 2/15/2010 10:25:00 PM

James Hagerty at the WSJ reports on two studies, one from John Burns Real Estate Consulting Inc., and another from Standard & Poor's Financial Services LLC that both forecast most modification efforts will eventually fail - and that mods have just delayed foreclosures. The Burns forecast is for another 5 million distressed sales over the next few years. See the WSJ: Foreclosures Seen Still Hitting Prices

Hagerty reports that Burns study suggests prices will be mostly flat unless the economy turns down, and the S&P study forecasts further price declines.

S&P says current trends suggest that 70% of [modified loans] eventually will redefault.
...
Loan servicers ... seem to have "nearly exhausted the supply of plausible candidates for loan modifications" and will find that many loans are "unredeemable," the S&P study says.

As a result, servicers increasingly are looking to arrange "short sales," in which homes are sold for less than their loan balances.

This will be the year of the short sale.