The Home Owners' Loan Corporation (HOLC) was one such successful temporary intervention; its help in the 1930s mortgage crisis holds lessons that are still relevant.
I think I made reference to this in another thread Chris, however if I am not mistaken this was struck down by the Supreme Court shortly before it was set to expire. Even this would be preferable if we have to run about handing out a trillion dollars to someone.
The Home Owners' Loan Act of 1933 created the HOLC. The agency eventually grew to about 20,000 employees but was designed as a temporary program "to relieve the mortgage strain and then liquidate," as one early description put it.
The Treasury was authorized to invest $200 million in HOLC stock. In current terms, based on the consumer price index, that's about $3 billion, but if adjusted based on the change in gross domestic product per capita since 1933, it would be about $20 billion. The act initially authorized the HOLC to issue $2 billion in bonds, or 10 times its capital, which relative to GDP per capita would be about $200 billion today. The idea was that for three years the agency would acquire defaulted residential mortgages from lenders and investors, give its bonds in exchange, and then refinance the mortgages on more favorable and more sustainable terms. Lenders would have a marketable bond earning interest, although with a lower interest rate than the original mortgage, in place of a frozen, non-earning asset.
Alex J. Pollock - A 1930s Loan Rescue Lesson - washingtonpost.com
Sounds like a great idea. Help the homeowners keep their homes and prevent foreclosures.
Let me tell you something from my experience as a realtor. Foreclosures are about 20% of the homes for sale here in Va. Most of those homes are trashed really bad. You can't sell them. It is as if someone came in and destroyed all these homes. This has the perverse effect of keeping the values up for the homeowners who are keeping their homes up, because the foreclosures are so trashed that they are not competition for well cared for homes.