This post is in regards to a series of readings we have done at LoanModificationDaily.com .

This is a broader look at the Economic Crisis, The Housing Crisis, news such as Tax Breaks for California Home Buyers, Most Recent home sales activity in the San Francisco Bay Area, and in conclusion a look at how the current measures will help stimulate our economy and the housing market.

First off I strongly believe until the decline in housing prices is not stopped we won’t be able to predict a bottom to the economy (Bill Gross PIMCO Chief Investment Officer). Homes are the largest asset class held by American consumers, and consumption is the largest portion of our GDP.   On a side note: unemployment, and the availability of credit are closely related but not the focus of this article.  If home prices continue to decline it means Americans feel less and less wealthy which means they will cut back on consumption.  Reduction in consumption equals continued reduction in GDP which means a continued recession and hopefully not a depression.  Bill Gross who is a Chief Investment officer of the largest bond management company outlines this information in his Feb 2009 newsletter .

Followed is the the new Obama stimulus plan and the mortgage relief plan.  The stimulus plan is designed to increase employment however the unemployment rate has not stopped increasing so the net effect of the package is hard to predict.  The mortgage relief plan is valued at $75 B with an additional $75 sitting on the sidelines for a Phase 2 or even 3 relief.   All indicators that the bottom is nowhere in sight.  Important to note however that the details of the mortgage relief plan indicate that they will try to stop or assist in finding a bottom sooner than later in the housing market.  This is a must and priority.  If banks can’t lend at the same rate they did, Americans are continually loosing their jobs, and asset prices are continually falling then the economy is contacting and the housing market is suffering.  Everyone and everything is getting pinched.

California just introduced a measure to  give residence a $10,000 tax credit on their purchase of a new or previously unoccupied home.  This is great news for the home builders but the net effect is probably going to be minimal.  Since foreclosures are still rising in  many parts of the country it means that inventory of “homes for sale” will continue to rise.  Further new homes don’t seem to be as desirable in outlying suburban neighborhoods since factoring in cost of transportation and the availability of employment strongly outweigh the $10,000 tax break. Read the full article here from Reuters : California home credit seen as a quick boost to home builders

This article was published in the San Francisco Chronicle a few days ago: Foreclosures ignite hot Bay Area home sales. But what’s important to us about this article is that foreclosures continue to increase and new home sales continue to slump.  Is the tax break really a short term cure for new home builders?  The best line in this article is “despite no sign of declining home prices”.

On a closing note, I don’t think law makers from Washington to Sacramento know the exact cure.  Yes they are taking swift action to halt declining home prices and a spiraling economy.  However the swiftness of the decline demands such action.   On the same note if you are faced with a hardship and/or your home is underwater but you don’t you may qualify for federal relief don’t hesitate contacting a qualified loan modification agent for a free consultation.  Filling out a loan medication application along with an initial review of your specific financial situation should not cost a single penny.  You can call the following Loan Modification Company for your free consultation now.