Despite encouragement from policymakers, many banks have moved slowly to aid distressed homeowners. When they do modify mortgages, the fixes-such as interest-rate cuts-often are temporary and only put off the day of reckoning.rnWith another wave of foreclosures looming as payments on risky loans rise and unemployment remains high, it looks as if banks may be forced to resort to a remedy they've been trying to avoid: principal reductions. Banks don't like principal reductions for obvious reasons. But many economists, policymakers, and homeowners see it another way. While interest-rate reductions or extending loan terms do reduce homeowners' monthly payments, they don't give much comfort to borrowers who owe more on their homes than their properties are worth.
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