The downside of the mortgage do-over Congress seems to want to cram down the throats of the mortgage lenders is that nobody will invest in mortgages again without an extremely high risk premium built into the interest rate. Also, as the economy softens, the risk premium will spike higher which will further choke off housing sales.
idiots politicians that decided ethanol from corn was a great idea didn't expect many food products would double in price. They also don't seem to understand that the days of low cost mortgages will disappear when a new major risk of principal erasure in bankruptcy is introduced. Soon mortgage rates will look like credit card rates. Savy shoppers with 750+ FICO scores might get 9 to 10%. Those with 600 and above might get 18%. Below 600, 28% might be all there is.
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius