The issue is not about the slob borrower who was reckless, which I share your position on, but a separate issue dealing with the ability of the mortgage business and Fannie Mae/Freddie Mac encouraging the set up of an electronic system that will allow mortgage backed securities to be traded like stocks. Problem is it wrecked the manual system of recording the deed/clear title for the property. The bankers, mortgage companies and Freddie Mac and Fannie Mae set up a system where huge amount of money was made on fees, commissions and etc on the MERS exchange at the expense of the legal support documents involving the mortgagor and mortgagee. Foreclosure crisis is exposing this mess, but it also involves people who are making their mortgages on time but the note is sold to so many times they may not have a clear title when they try to refinance, sell their home or pay off their mortgage. In other words the gov set up an electronic system and did not supervise it, thus allowing bankers to concentrate on making money on the exchange and in the process neglect the proper paperwork/document process that is critical to the homeowner down the road.
Your analysis may be accurate as far as the mechanics of the issue, but the larger societal implication is that profligates and deadbeats get another break while thrift and industry are penalized.
Every other point on this issue is insignificant.