Trillions will be lost because they were never there on the equity side.
I know a young couple, bought a home in the 250,000’s (seemed like a good price at the time...back in 2006), put 70,000 down, but the home has lost more than half it’s value since they bought, so now there is no equity. They sold on a short sale (not necessarily because of the mortgage payment but because of the taxes/insurance hit they were taking on the property.) The bank came back and placed some sort of a lien on them for the difference of what they owed and what the short sale was. They were current on their payments, but like I said, insurance and taxes unfortunately weren’t adjusted down as fast as the prices fell, and the bank absolutely refused to change or lower their interest rate, so they chose short sale.
Here’s an interesting story from our morning paper which seems to me is going to lead us right back into the same sort of mess we’ve come out of:
http://www.tampabay.com/news/business/realestate/article1149420.ece