Housing Prices Still The Problem

In an article for National Journal, the challenge of an economic recovery is linked directly to the still pressing need for stability in the housing market.
The article praises the action that the government is taken, there are definite criticisms with how slowly they came around to begin and the nature of what they've done, but they have certainly not been timid or idle once they began.
But the article believes that for all the attempts to stabilize banks and infuse liquidity, they have not focused enough on where the problem began - the housing market. The effort to modify loans in order to allow people to stay in them and avoid foreclosure has not been nearly wide enough, in part the author feels, because companies are paid for foreclosing, but not for arranging modifications.
The notion that there is a floor in the housing market, the article says is misleading one. Home prices will fall as far as the economy falls, there is no fixed floor. As the banking crisis is linked to recession in the economy, the circle of unemployment and home foreclosures will continue.
There are ideas to break this cycle. They include incentives for refinancing by mortgage companies, offering money to banks that modify loans for those facing foreclosure. The concern is that this could encourage more people who are close to default, costing the program more, but this seems to be less costly overall than a wave of foreclosures which has so far left banks unable to survive.