I think he means a flat 1.5% the moment a home in the area goes into foreclosure.

Here’s a question though: would you prefer people walk on their mortgages or the government bail them out?

Both have negative moral implications. People walking out will cause banks to make up the loss on new loans, while a bailout will tend to keep prices inflated.

Given that I have to say I’d rather see people walk. As banks raise rates to cover their losses, it should drive down demand even more.