You all know how dumb I am about money, so let me ask you this:
If they get the money, what guarantee is there that they will actually pay off their mortgages?
and
If they pay off their mortgages, will they want money to buy a house somewhere else?
Presumably the money would be paid directly to the mortgage company. Even the federal government isn't stupid enough to make the check payable directly to the homeowner.
Of course, the plan would give the homeowners at least 60% of their imaginary equity in a worthless house, so they'd get that, and the ones with an IQ higher than an oyster would go live somewhere else.