New mortgage relief program

The Austin American-Statesman included this article this morning detailing the new, expanded mortgage relief program:

U.S. revamps program to aid those in mortgage trouble

Approximately 6 million homeowners nationwide have missed at least two mortgage payments, and as many as 10 to 12 million foreclosures are possible in the next three years.  Under the mortgage aid program that has been in effect for the past year, only 170,000 have successfully completed mortgage modifications.  A large percentage of homeowners who began that process defaulted again, sometimes missing the first payment on their newly modified mortgage loans.

Of course, I hope as many homeowners as possible can find ways to keep their homes, and a flood of heavily discounted foreclosures will drive property values down.  However, I am concerned that this program may have the unintended effect of making this recovery process take longer than it would if we just let the market correct itself.   Will a smaller flood over a longer time be better, or worse?  Time will tell.