Well... the honest truth is that in the fall of 2008 when the Bush administration instituted TARP, and spent over 700 billion dollars to try to head off a catastrophe they saved the banks and financial institutions.. and made no provisions for mortgage holders.

Yes Obama should have had a better plan than what they have done to try to modify loans so people could save their homes..

There is plenty of failure all around.

The only way to remedy this is that the federal govt go in and reduce interest rates on existing loans for homeowners.. say by 3 percentage points for like 5 years of maybe the first $500000 in loan amount..

This would do many things simultaneously... It would shore up the housing market immediately, as most people would work hard to save their homes, and not walk away from them. It would also infuse a lot of cash into the economy direct to the consumer and stimulate growth.

Yes it would be expensive but simultaneously the fed could raise interest rates on the money they lend banks to make up the differents..