You are not alone in your quest for an answer to all these foreclosures. As much as people want to keep their homes, government bailouts to banks is not the answer. Homeowners need to be bailed out first so they can continue paying on time. It's pathetic to know that we have to discredit ourselves by being delinquent on payments so we can get help. If the government does not impose lenders to work with homeowners, how can you prevent foreclosures? I think, principal reduction with low interest rate is the answer to this problem.

Real estate downturns typically last 10 quarters. Accordingly we have at least another 9 months to go.

Mortgage restructuring? I'm all for it. Principal reduction? Not so much...

Real estate is a long play -- it always has been and always will be. A large portion of the whiners in places like FL were speculating short, plain and simple. They lost -- something that often happens when you speculate on real estate. The remainder of these people pretty much made a bad investment decision buying high, and some of them are now being forced to sell low. This is our fault, how?

Ten years from now, likely all of these properties will be worth more than they were when they were purchased. (cf. 1980s) If their principal is reduced now, and they sell at a profit later, will you force them to refund the reduction plus interest, or will you simply let the rest of us fund their capital gain on a poor decision?

Some people will be unable to play long enough to see that return -- which means they made a bad play buying when they should have been renting. Reimbursing people for poor investment choices is more than a moral hazard -- it's ridiculous.

Home prices shouldn't have been allowed to go up so high in the first place. It's unfortunate that all this is being blamed on regulation. The fact of the matter is, our elected officials (republican, democrats, etc) should have acted as regulators. Interesting, the stock market and housing market crash have more in common than you think. The major one being that our elected officials had failed us twice MISERABLY.

In both case, those who bought into high prices just have to eat it and allow housing prices to adjust on their own. On the upside, low housing prices should provide opportunities to those who haven't bought yet.

You are correct when you say that the problem is not simply due to people over-extending themselves mortgage-wise. I personally think that the real problem is that house prices went up to a ridiculous level and lenders kept lending and house prices kept rising. Here in Houston if you pay $300,000 for a house, you get around 3000 sq feet. In California, New York, and other areas people are paying more than that for an 800 sq foot dump. I think that prices will continue to fall until they are more realistic.

"House prices will not improve until the backlog of foreclosed homes is sold. Only then can the price of houses begin to stabilize. So the first step toward stabilization is to reduce the number of foreclosures."

No. House prices will not improve until the houses become affordable for the average American. The artificially inflated market has a long way to go.

You can bring whatever variables you want into the equation but the bottom line is that speculation artificially inflated the market.

First, housing price has to be in line with the local income level. Second, housing should never become a speculative venture on such a vast scale as was 2002-05. It became a gold rush market and the vein has now run out.
So far I have been pretty accurate in my guesstimates and I give the housing market until June 2009, to bottom. Unfortunately, by this time the economy will also be experiencing massive credit card default.
I also predict that inflation will appear and this statement will be contrary to the expectations of just about all economists. Most would see the decrease in oil as slowly pushing through and taking food and transport related items along for the ride. What is not being considered is that we are an import based economy and our major supplier is China. The Yuan does not "float", but the dollar does. This will result in import increases, just watch.
Governments are well intended, but to frightened of banking collapses to see the entire picture and as such, jump to the rescue. While these plans are in order and required they are ill planned and probably will generate less than the desired result. They are not saving anything as the "domino" effect continues and if the industrial side is ignored, massive layoffs will result. This in turn means less tax revenue and of course, more mortgage and credit default.
Before anything is going to change - the attention has to be diverted from Wall St. and to the basic U.S. economy. Wall St. and the banks are responsible for the mess, but they cannot be allowed to take everything with them.

everyone venting their anger on line but not at the polls. same idiots running the country who have created this mess and no one cares to change it. dont look for any changes for a long time. monkey see as monkeys do

Houses were way over value. The market is adjusting. You are fine if you bought your home ten years ago