It's pretty easy... 

House of Representatives Democrat John Conyers of Michigan knows how to do it.  He has outlined a simple plan. 

• Allow bankruptcy judges to set aside mortgage balances in favor of "good faith attempt" to pay off mortgages... and the borrower gets to keep the house. 
  

While the plan has been modified to only include certain mortgages, it would still be devastating in SO many ways.  It would literally destroy the dream of home ownership as well as the entire US economy.  People would wish of rthe days of the Great Depression if Conyers got his way.  

Some of the results would be:

• Mortgage rates that would look like credit card rates.

The credit card issuers do not have protection via secured assets that mortgage lenders have.  So, they know that a consumer that declares bankruptcy can walk away with the "stuff" and leave the creditor holding the bill.  So, they have to set their rates accordingly.  If homes were treated the same way, and the debt could be set aside without the loss of the asset to the borrower, mortgage lenders would have to set their rates to account for THAT risk... Hello 18.9% mortgage.

• Difficult hoops to jump through for a mortgage.

Image the type of approval process one would have to go through for a mortgage if the borrower could later just walk away and leave the lender with the debt...

• Absolute destruction of home value and equity.

So, very few people can qualify for a mortgage.  If you think it is slow now, wait until only 3% of the would be buyers can get a mortgage.  Prices would crash and then burn... and then crash some more.  

• And then building would stop. 
  

Not slow.  Stop.  How would a builder compete when existing home prices drop 60 or 70%?  Not to mention that demand would be all but zero, since so few people could qualify for a loan.  

• Now comes the jobs crash.

Construction jobs would all but dry up.  Mortgage jobs would be toast.  Real Estate agent would drop like flies.  Right there we have added another 5 or 6% to the unemployment line.  When we start adding in the jobs that are dependent on those workers, add another 5 or 6%.  Does a 15% unemployment rate sound like a good idea?

• But there is one segment that would rally like no other.

Companies that rent property would have a boom.   Since the demand to buy would have to remain pent up, and buyers would not be able to qualify, it would be an incredible time to own rental property.  Those rental owners would be able to jack their rates freely.  In effect they would have a captive consumer base.  Supply and Demand would not work in the favor of the consumer.  

One day the people in DC will learn about unintended consequences.  While trying to help a few people that made poor decisions, they quite literally have the capability of sending all of us down a path to economic ruin.  And they don't seem to understand it.  

As stated here previously, the market WILL deal with this issue in the most efficient and least damaging manner.  People WILL be hurt, but fewer will be hurt by the actions of the market than will be hurt by those trying to "fix" it.

Feel free to visit Rep. John Conyers (D-MI) web page to see the new version of the plan.