If at first you don’t succeed in quickly lowering four million home mortgages to ease the foreclosure strain on a gasping system, well, um… try again—or at least try a new angle. That’s what the federal government is doing in another effort to ease the financial crisis at its source. According to the AP :

The government’s bold new plan to stem the foreclosure crisis aims to succeed where previous efforts have fallen flat. Yet just as before, the odds are long, and many struggling borrowers won’t qualify.

In theory, the effort unveiled Friday would help millions of troubled homeowners who owe more on their mortgages than their homes are worth, or who are jobless and need a break on their payments.

But it depends on cooperation from investors and bankers, many of whom have been locked in disputes over whether to reduce the debt owed by homeowners.

It’s a tricky problem. You don’t want to sink a bunch of money into mortgages that are probably going to stay underwater, even with assistance. And you don’t want to spend the limited pool of relief money on people who will probably be able to keep paying their mortgages without the help (which can seem unfair to those who’ve sacrificed in order to stay ahead on their payments).

What’s left is the middle group — those who aren’t hopelessly underwater, but who won’t survive without a bit of assistance. Defining that group takes time, data, and vast cooperation by the banks — none of which the government really has in abundance. And so far, the program has only helped a fraction of its original goal.

So the government is rethinking its approach.

The new effort is designed to help two groups:

– Borrowers who owe more on their loans than their houses are worth. More than 15 million homeowners fall into this category, according to Moody’s Analytics. About 10 million of them owe at least 20 percent more than their house’s current value.

Their mortgage companies can cut the total amount they owe, or they can refinance into loans backed by the Federal Housing Administration. FHA will get $14 billion in incentive money from the federal bailout fund.

– Unemployed borrowers. People receiving unemployment benefits would have their mortgage payments cut to no more than 31 percent of their monthly income for three to six months.

That’s intended to give homeowners more time to find a job. Once they do, they may qualify for a loan modification that would permanently reduce their payments under the administration’s existing $75 billion loan modification program.

The plan aims to help 3 to 4 million borrowers avoid foreclosure — the same target the administration tried to reach with its original plan last year. Even with the changes, the effort will likely prevent no more than 1.5 million foreclosures, estimates Mark Zandi, chief economist at Moody’s Analytics. [...]

"Practically speaking, this is probably going to prevent foreclosures. But I don’t think they’re ever going to reach 3 to 4 million homeowners," said Chris Mayer, a real estate professor at New York’s Columbia Business School. "These plans always turn out to be harder than we think."

Still, analysts said this effort has a better chance of success than past efforts because it would reduce principal for some struggling borrowers — a method more effective at helping homeowners than reducing interest payments or other forms of aid. Laurie Goodman, a widely followed mortgage securities analyst with Amherst Securities Group, called it "a huge step forward."

The goal is to help people who would normally be ideal loan candidates. In other words, those just going through a temporary rough patch. Because it doesn’t help you, us, or the country as a whole for a bunch of competent, hardworking Americans to be losing their homes based on short term market-wide circumstances beyond their control.

This program is just an ongoing attempt to slow that downward spiral. In my humble opinion these supposed efforts from the federal government will fail, just as they have failed over the past two years. The best way to solve the issue of the housing crisis is to allow foreclosures to happen and to promote the purchase of homes by those who can afford them with real jobs, real income, and real interest rates. Propping up homebuyers that can not afford their homes will only hurt the homebuyers by keeping them in debt over their heads, especially when it may be cheaper to rent a home at half the expense.

If you feel like you might qualify to buy a home you can afford, contact TexasLending.com mortgage loan experts for more information. At Texas Lending, we want to see everyone in Dallas-Ft. Worth make it through this, and will help you understand what you need to know.