I could give some kind of long winded (for me) spiel about why it is failing. But let me just cut to the chase.
...in order to avail of a loan modification, a distress homeowner should be financially capable of making payments which is hard to do if he had lost his job. And California is one of the states where unemployment rate is at its peak. The state’s 10.1 percent unemployment rate in January 2009 is way higher than the 7.6 percent rate nationwide.Obama's promises to keep adding new burdens to the economy (higher taxes, cap and trade, new health care initiatives) are not helping to get us out of recession. And when the tsunami of money he has been spending finally rolls back over the economy we are going to get inflation that will make the housing bubble look like a gentle wave.
Studies showed that unemployment is the main reason why prime borrowers fall behind their monthly payments, go into default and eventually become victims of the foreclosure crisis. And this bodes ill for Obama’s strategy to offer incentives to mortgage providers to modify loan terms to make them affordable to distressed Californian homeowners.
Stagflation is coming. Big time.