Mortgage help for states hit hard by unemployment/homeowners unable to pay their mortgage

I read States: Let Taxpayers Cover Your Mortgage over at CNN Money and if you are unemployed and underwater on your mortgage (or know someone who is) it is probably worth the read.  Basically, some states are going to use Federal money to help out the unemployed and underwater folks in certain states.  Is your state on the list of the ones who plan to use taxpayer money to bail out those unfortuante folks?

I see both sides of this.  No one wants to be homeless and when the economy is bad and there are no jobs and you fall behind on your bills... you don't want to be in that position at all.  In a previous life, I worked with an attorney who filed foreclosure actions about quarterly for a local bank.  It always broke my heart knowing that it had to be done.  Of course, times were different then... we're talking over a decade ago.  The economy wasn't busting and the housing bubble hadn't even thought of growing.  Believe it or not, getting someone out of a foreclosure home can be pretty time consuming.  There are ways to delay the process... the party could wait until the last day to ask for a face-to-face meeting and then push it out a good distance too.  It's all a legal game of cat and mouse and an expensive on for a bank to undertake.

The four states poised to use taxpayer money to help the unemployed/underwater folks pay their mortgage are Florida, California, Michigan and Arizona are high foreclosure states.  Something needs to be done, but does it have to be a free handout?  Will the residents of those states be grateful to help out their neighbor because foreclosures drag down your own property value?  Bear in mind, too, that California is well-known for its own budgetary problems.  They already spent too much money!

I don't know what the solution is... but I know that if you keep handing people money, they'll keep coming back. I'd rather see the states offer to lend the money to those underwater or unemployed.  How about enticing banks to restructure more loans?  Back decades ago, farmers could get government backed loans that were for a forty year term.  Most people don't stay in home that long, but lengthening out the term and giving a low rate should help some.

What are your thoughts on this?