Via Megan McArdle – I’m not for this, but it would solve the problem.
My lunatic proposal for the day: why not make it easier to move homeowners out of homes they can’t afford? Set up a streamlined foreclosure proceeding where a current or mildly delinquent homeowner can simply give the house to the bank and walk away. Do this with two legal provisos:
1. No tax on the forgiven loan
2. No black mark on the credit record. The bank marks the loan as fully satisfied.
Of course, if we decide to actually “fix” the problem we should loosen immigration and get people actually in the vacant houses.