The mortgage industry came up with some twists on mortgages like interest only loans and teaser rates to start out their loans with but they are still all based on the 30 year models that are quite archaic and with not much creativity. 
There are creative ways to give buyers ways to reduce risk just as it is done with their stock portfolios. "The U.S has been creative in mortgages but in a very narrow way." This is what Andrew Caplin a professor at New York University states.
So here are some ways that that banks could reduce their risk of foreclosures:
- Vary the duration of the loan instead of the monthly payment. Adjustable rate mortgages can be risky because the monthly payment can shoot up drastically when it resets. You could keep the payments fixed but take that higher interest rate and extend into a longer term mortgage. This is already being done in other countries. It is not being offered in the United States.
- Allow the buyer to buy a put option. The risk reduction is like the same for the futures short sale. The homeowner buys insurance against the decline in regional home prices. A nonprofit group called NeighborWorks America has sold dozens of insurance policies on home-price drops in Syracuse, New York. I have not heard of it being done anywhere else. I do not thing that this has caught on.
- The late Nobel economist Franco Modigliani proposed a mortgage version of the Treasury inflation protected bonds. Monthly payments would creep up slowly in times of high rates of inflation and higher interest rates. In some places these are prohibited, like in New York. The Modigliani mortgage have not caught on.
- Share the appreciation with an investor. The homeowner agrees to share in the profits with an investor. I did this with a private investor on the very first home I ever bought. But this can be set up within the mortgage industry. In the 1970's a few banks offered this but when home prices started to escalate buyers did not want this type of mortgage anymore so it was not used again. The IRS also needs to change the code regarding how these payments are viewed in order for it to be something homeowners would want to do. This has caught on in Australia. In San Francisco there is a lender who is offering homeowners 15% of their home's value for 50 % of the appreciation in a sale in 5 years, it has handed out about 10 million dollars in 2007.
These are just a few ideas that I researched that the mortgage industry can become more creative in their products by thinking outside the box.
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I am Palm springs loan guy. Palm Springs Ca. and I like your thinking. I am sure that there is some think tank working on all the things you mentioned and more. Lets cross our fingers.
Palm Springs Mortgage Guy Charles Dismuke