EIN News says, "U.S. Mortgage Defaults Soar to Record 13%. Widespread joblessness is causing more Americans to fall behind on their house payments, triggering a new round of foreclosures that some analysts fear could delay the nation's economic recovery. (latimes.com).
There are two possible answers for government.
If government feels this is not an immediate disaster, it should take no action. Let the market handle the problem by the previously developed standard procedures.
If government feels this is an immediate disaster, it should declare a mortgage moratorium. Pick a year or two. During the moratorium, mortgagors who are able to make their mortgage payments should continue to do so. Mortgagors who are unable to make mortgage payments will continue to accumulate the debt of back interest for some future resolution. There will be no forgiveness of debt.
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