Why Housing Continues To Slide

Banks are reluctant to help (because it would mean they would lose money):

Washington’s main response to the mortgage crisis so far has been last year’s landmark housing bill, which created the Hope for Homeowners program. The program was expected to help 400,000 homeowners work with their banks to write down loans to more affordable levels.

The program has fallen short. A report to Congress last month said only 300 loans were being reworked. Congress and the Bush administration blamed each other for the shortcomings, with experts saying the program stumbled for a variety of reasons as lenders were reluctant to take losses and borrowers were unable to meet eligibility requirements.

Bert Ely, a banking consultant watching the debate, said ideas for a government-run program to offer low, fixed-rate mortgages surfaced late last year. But interest in it waned once the costs were considered.

...“When you start getting into the numbers, you start to realize it would be very difficult to execute and could be quite expensive,” Ely said. “You’re talking about millions and millions of mortgages.”