this will not happen because the government will do a massive bailout by purchasing all these loans at possibly a percentage of the original loan amount. Basically the taxpayers will be giving free houses to those who were reckless and worked the system to get what they wanted.

IMO, the US is moving towards the kind of socialism practiced in Western Europe. Will we see the same ills that plague Western European countries, unemployment in Germany is 9%, at one time as high as 17%. France, same problems, Belgium, worse. Socialism never works and will eventually be the downfall of the US too. The only reason the US became the greatest country in the world was due to capitalism. Ultimately money motivates people and fosters innovation, growth and productivity. Without that incentive there is nothing!