Count on the govt to screw up whatever they decide to do. This actually could be beneficial in that re-pricing of the market would be done on a wholesale basis. Rather than wait for the market to process all the upside down people, the govt just starts slashing the loans and thus reducing the encumberance that must be dealt with before a new transaction can be completed..i.e..reducing the outstanding loan balance. They could lock-up the homes from transactions, but that would kill the RE business. So I doubt they’d go that far.

It’s pretty hard to deny the market pressure out there, but it’s funny watching the massive incompetants of our politicians as they try to “solve” the problem. No matter what scenario I run through my mind, it still ends up that the prices will be forced down for the market.