Sympathy keeps pouring out of the Obama administration for troubled homeowners that owe more than the current value of their homes. Not a government to tolerate the unfairness of financial distress, it has announced another housing program for under-water homeowners.

Taking a $14 billion chunk of the existing $75 billion foreclosure-prevention program, the new program asks that banks and lenders reduce the amount that homeowners owe on their loans and offer them new loans. The new loans will be backed by the Federal Housing Administration.

In exchange for slashing the debt owed by the borrowers and participating in the administration's existing foreclosure prevention program, the lenders will receipt incentive payments from the government.

The plan also includes three to six months of temporary aid for borrowers who have lost their jobs. There will be additional payments designed to give banks an incentive to reduce payments or eliminate second mortgages such as home equity loans – a problem that has blocked many loan modifications.

Will this, the latest and greatest government housing rescue program really work? Well, so far all the prior Obama administration housing rescue plans have been dismal failures. Personally, I don't see this current plan making a significant difference.

In my 10-1-08 post entitled I stated: "For the government to come in with this huge bail-out now, would just prolong the housing decline. I'd rather see the government stand aside and let the market forces determine the true area average home selling prices."

"For those who think a government intervention is the only way out, I say do it without direct taxpayer money. The undisputed key to this recovery is housing. If the government truly wants to ignite a fire under the housing market, I personally would propose a very simplistic approach that would have immediate results."

"The government should pass a bill that allows any home purchaser, owner-occupied or investor buyer, who buys a residential property within the next two years and holds that property for a minimum of three years (and a maximum of ten) to be free of federal capital gains taxes upon selling the property. The potential, tax-free profits on my idea would be a huge incentive for investors to jump back into the residential housing market. This increased demand would clear the built up housing inventory in a matter of months for most areas."

Let's face facts … many people purchased homes way out of line with their realistic budgets. Plus, a large percentage of recent homeowners who had their home loans modified are once again behind in payments.

What is so wrong with renting? It seems that all these government programs are doing is prolonging the housing recovery.

Published: April 26, 2010

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Bob Schwartz is a Certified Residential Specialist, San Diego real estate broker & co-owner of an Internet search engine optimization firm, specializing in domain name registration and Internet domain website hosting. Bob received his BBA majoring in real estate & computer programming. Bob is an expert witness for major San Diego law firms, has served on the Consumer Affairs Community of the San Diego Association of Realtors, is past president of a local HOA and co-owner of a condominium management Co., and directs a multi-state high traffic network of legal directory sites. Visit Bob's San Diego real estate blog.