It goes without saying that the housing crisis isn't "fixing" itself any time soon. In fact, it is going to get worse. As home values remain stagnant or continue to fall in some areas, underwater homeowners are just walking away from their mortgages in droves. This further drives down home values and increases our liability for continued bailouts of Fannie/Freddie. It also hurts the bottom line of lenders who hold the mortgages in house instead of selling them to Fannie/Freddie. Should the government do something to "adjust" those mortgages for underwater homeowners? Not so much. The mortgages are legally binding contracts and I am completely opposed to government ignoring basic tenants of contract law. That being said, something SHOULD and MUST be done to stop the hemmoraging of money and equity.
Here is my proposal - all those people who can afford it should make an effort to PAY DOWN the mortgage balance of homeowners who are upside down on their home equity. Warren Buffet - are you listening? Your company owns 6.9% of Wells Fargo (one of the most profitable banks in America). Instead of challenging Congress to pay down the national debt, why don't you take some of those billions of yours (which you think should be taxed more aggressively) and use it to help homeowners.
If Joe Smith owes $200,000 and his house is worth $150,000 - why not just PAY DOWN HIS MORTGAGE to $150,000? I'll even let you have a "charity" deduction on your taxes for it!
Rather than letting these houses go into foreclosure or trying to short-sale them, why don't you rich guys step up to the plate and actually HELP these homeowners to keep their homes? 11 million homeowners are underwater - the total negative equity is $751 BILLION. If that number was brought down enough for people to refinance their mortgages, the entire housing industry could re-set itself. That would mean an average of $68,300 for each of those homeowners. Who is going to step up to the plate? The government doesn't have the money.
If you're a Warren Buffet with a net worth of multiple billions, go find Joe Smith and help him out. If you're a Mitt Romney with an annual income of $45 Million, try helping a couple of people who could use $68,300! The Mormon Church will live on if you don't donate $6 mil a year to them! Mr. Obama - YOU made over $5 Mil in 2010, can you afford $68,300 to help someone? Newt - you made over $3 mil in 2010 - help a guy out!
I advocate a low tax rate for EVERYONE and less government involvement. Well, the flip side of that is INDIVIDUAL Charity. Step up to the plate, Mr. Richie Rich!