We have a better solution...
In India the government would have bought off all the failed mortgages for a dime on a dollar or simply allowed those companies to go bankrupt. Same with the banks and insurance companies. They would simply have been merged into state owned entities under similar conditions with the share holders hanging on to the worthless paper.
A similar approach with renegotiated mortgages, for example repayment plan sans interest, would have gone far in alleviating the miseries of the US population. The buyers would be held responsible but at an affordable rate. The government too would make money on their throwaway purchase price !
