Sheila Bair, the chairman of the Federal Deposit Insurance Corp., wants the government to make loans to borrowers with mortgages they can’t afford, particularly those buyers who had high levels of debt when they originally took out their home loans.
from the Boston Herald

I guess I should expect the government to think it’s a good idea to make loans to borrowers with mortgages they can’t afford. It worked out really well for the lenders who did it. The intent is good, trying to use the vast power of the U.S. government to try to prop up housing values, but how’s that going to work out with the neighbors? It’s a fairly safe guess that most people in a neighborhood will be paying taxes, so they’re supposed to subsidize the people with mortgages they can’t afford?

Housing prices will fall, and people who can’t afford their mortgages will lose their homes. Spreading the pain over a longer period of time by using taxpayer money doesn’t fix the underlying problem. Home prices in many areas went up too fast fueled by easy credit. Until home prices are more in line with area incomes, there will be downward price pressure.