6. Foreclosures may be forced to continue for homes where loan ownership is fragmented due to complicated MBS contract provisions.
For homes where the ownership of the loan is not fragmented, and the home is still borrower-occupied, foreclosures may be put on hold, waiting for the flood of new-buyer FHA loans to raise/hold home prices, and to replace the really bad existing loans with less bad FHA loans.
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One of the reasons they are pushing everyone to refi into govt-backed or subsidized loans (FHA and/or GSE loans) is because this solves the messy problem of private/fragmented MBS ownership.
Right now, they are keeping prices high, which keeps the prices of the mortgages high, so the private banks/lenders can recoup their investments at an artificially high price when the mortgages are refinanced into govt loans. Once they’re refinanced as many loans as possible, they will let prices fall, IMHO, because the taxpayers will take the hit instead of the financial industry (for all the reasons you’ve posted).
