NEW YORK ( TheStreet) -- While the Obama administration's "Making Home Affordable" program has been firing its gun at the housing crisis for over a year, it hasn't yet found the magic bullet.

Need a lower rate? The government has helped push the typical mortgage rate down to 4.32%.

Need the principal cut because you're underwater on the loan? The government will share losses with banks that agree to do so.

Have a second lien in the way? The government is incentivizing banks to work those out, too.

Are you in a state with high unemployment? You'll get extra help.

Do monthly payments still not make sense for you financially? Not to worry. The government is also nudging banks (with dollars) to use "foreclosure alternatives" like short sales or deed-in-lieu transactions as a last-ditch effort to avoid foreclosure.

"Making Home Affordable" seems to have everything covered. But the program has had lackluster results so far because the housing crisis is no longer contained to the housing market; its success now relies on job growth.

By measures of price and borrowing cost, homes are more "affordable" now than they've ever been - at least for new borrowers. Home prices have fallen at double-digit levels from 2007 highs in most states, and mortgage rates are at historic lows.

Yet existing homeowners have been burned by those same price declines. In Nevada, the vast majority of homeowners are underwater - meaning they owe more, sometimes a lot more, than homes are worth. In Arizona and Florida, it's split about 50-50.

In "underwater" cases, making mortgage payments simply doesn't make sense since homeowners have no equity; workouts simply don't make sense because banks would need to eat big losses on principal cuts. In other cases, borrowers simply don't have the income to afford anything. Elevated unemployment levels have made mortgage payments rise as a percentage of income, even as "affordability" metrics like price and interest rate have fallen to new lows.

The National Association of Realtors' housing-affordability index remained relatively high at 161.8 in July, the payment as a percentage of income rose to 15.5%. Any index level above 100 means that a family earning the median national income has more than enough to pay for a median-priced home. At the top of the market in 2007, payments were nearly 22% of income; at a low in January, the level dropped down to 14%.

The 10 "hardest hit" states are facing both quandaries at once.

The Obama administration has devoted more than $2 billion in additional rescue funds to Nevada, Arizona, California, Florida, Michigan, Ohio, North Carolina, South Carolina, Oregon and Rhode Island because they have seen home-price declines of more than 20%, and unemployment levels above the national average.

It's not going to be easy to fix the problem because it mainly comes down to job growth. Most of the jobs that have left those states aren't coming back any time soon. The financial crisis put the nail in the coffin for manufacturing and auto jobs in the Midwest and South. Much of the growth in Nevada, Arizona and Florida was pegged to overinflated home values and new construction; the last thing those states need now is additional inventory.

Despite the ongoing stress in the housing market, the big banks responsible for most of the mortgage-modifications and refinancings have been doing well. The four largest U.S. mortgage servicers - Bank of America ( BAC), Wells Fargo ( WFC), JPMorgan Chase ( JPM) and Citigroup ( C) - have earned $27.2 billion during the first six months of this year. But they're not making money because homes are more affordable, they're making money because the cost of borrowing is low enough to offset the ongoing real-estate losses.

What will make homes more affordable is a complete overhaul of the U.S. economy - its jobs, its wealth and its notion of homeownership. That's not likely to happen overnight.

--Written by Lauren Tara LaCapra in New York.

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