better to bailout the homeowners than foreclose on the average guy and bail out the mortgage companies anyway/.
More screams for a banker bail out.
1st: the "average guy", the "average" recent-homeowner is not in danger of foreclosure.
2nd: as it is now, not even a majority of sub-prime mortgages are in or approaching default status.
3rd: those (sub-prime) mortgage-holders that are in or near default status are most likely in financial positions where, in the final analysis, the added total cost of their interest portion of their mortgage (achieved when the rate is lowered but the length of the term is extended) will not put them in a position to have positive (appreciation) gains when they sell the house (the cost to pay off the mortgage grows with the additional interest that the time-factor produces). For many of the worst off cases (in the riskiest markets with the worst credit and least down payments) they will in the end be no better off than had they gone back to renting, with less monthly payments for housing and some margin of ability to save.
4th: Foreclosures of "prime" mortages, in the current situation, are not outside historical (and cyclical) norms (they go down when the/a national/regional house market is booming and go up when the/a national/regional house market is slowed or slowing).
The best thing that Congress can do is to stay damn well out of the issue and let time and the housing and financial markets work things out. If someone in a "subprime" situation is in or near default and is in fact financially worthy of getting their mortgage renegotiated, then they, and everyone like them, constitute a market opportunity that - if allowed to be explored ON THE ECONOMIC/FINANCIAL MERITS ALONE - will in fact find a positive response somewhere among our financial institutions, without any act/tax-break/subsidy from Congress.
Those who could never otherwise get their sub-prime mortgages renegotiated anyway, because they lack financial merit to do so, will be better off going back to renting (and doing so in a way that they are NOT living beyond their means), to provide some measure for savings - and in time that can place them in a better position to enter the house-buying market later on.