Resetting ARMs to fixed won't be attractive to those who owe much more than the house is worth, which is the majority. Getting to live rent free in a nice house they can trash and loot, and not having to pay property taxes or homeowners dues, is too attractive to pass up. In some states the foreclosure process can take 1.5 years.
Really you want neighbors that have at least 20% equity, not those just scraping by. Those with no equity aren't going to improve their property for the bank's benefit. Speeding up foreclosures to get this bubble over with will get the construction industry and economy restarted faster than letting things go downhill for a long time.
“Speeding up foreclosures to get this bubble over with will get the construction industry and economy restarted faster than letting things go downhill for a long time.”
I think the fear is that as the bubble is deflated, there would be a domino effect on people not yet in trouble or sitting on a bad asset. That may be why the gov wants to take a more measured approach and try to prop up the situation. My fear is the government will over react and try to fix other concerns under the guise of this mess, like healthcare, college loans, or whatever.