Yes the president passed HCR (HIR) and if he only stays one term, he has an accomplishment that will put him amongst the greats. However, if he wants to secure a second term and help insure Democrats keeping the congress, then here is how he does it!
Back in the 30's the Federal Government inserted itself into the housing market at a unprecedented level. It created what was called then the Home Owner's Loan Corporation (HOLC).
Alex Pollock writing for the WashingtonPost.com back in 2008:
The Home Owners' Loan Act of 1933 created the HOLC. The agency eventually grew to about 20,000 employees but was designed as a temporary program "to relieve the mortgage strain and then liquidate," as one early description put it.
The Treasury was authorized to invest $200 million in HOLC stock. In current terms, based on the consumer price index, that's about $3 billion, but if adjusted based on the change in gross domestic product per capita since 1933, it would be about $20 billion. The act initially authorized the HOLC to issue $2 billion in bonds, or 10 times its capital, which relative to GDP per capita would be about $200 billion today. The idea was that for three years the agency would acquire defaulted residential mortgages from lenders and investors, give its bonds in exchange, and then refinance the mortgages on more favorable and more sustainable terms. Lenders would have a marketable bond earning interest, although with a lower interest rate than the original mortgage, in place of a frozen, non-earning asset.
If Democrats want to be populists then they need to propose something similar. They need to go all the way with Fannie & Freddie dissolving them and creating a new entity that will enable homeowners who are distressed and underwater to refinance at current home prices at low or no interest for a short period of time and then adjusting to current market rates or whatever is appropriate for that homeowners' credit and income situation at that time. Banks who hold underwater mortgages would need to eat the difference in the current home prices and the underwater mortgages. However, congress could give them some mechanism to write down those losses over a short period of time to mitigate their pain.
I am not talking about a handout, but I am talking about a bailout of homeowners (Main Street). Between the Fed and congress we allocated about $5 trillion for banks and AIG, we could allocate many factors less than that to rescue homeowners in distress.
While it existed, the HOLC made more than 1 million loans to refinance troubled mortgages; that was about a fifth of all mortgage loans nationwide. By 1937, it owned almost 14 percent of the dollar value of outstanding mortgage loans. Today, a fifth of all mortgages would be about 10 million loans, and 14 percent of outstanding mortgage values is about $1.4 trillion -- approximately the total of all subprime mortgage loans.
The HOLC tried to be as accommodating as possible with borrowers but did end up foreclosing on about 200,000, or one-fifth, of its own loans. Given that all of its loans started out in default and close to foreclosure, another perspective on the HOLC foreclosures is that the agency's loans had an 80 percent success rate.
Here is another document I found written by David Wheelock that gives a more historical perspective on the housing crisis back in the 30's.
All that is missing with fixing one of the two last pieces of our economic problems (the other being the deficit/Debt) is political will. The will to overcome the expected conservative and tea-bagger objections. The will of Democrats to educate the American people that the program would further help us get out of this economic mess caused by Bush and his crony Repub congress