A. you can't just pay off peoples mortgages, that would cause such a ruckuss you wouldn't believe. You see how many people line up for welfre, think of what would happen if people heard of the govt paying for houses. I know you were being facetious :D
B. While on paper or talking about it foreclosure sounds like a simple idea of taking the house from those not paying and selling to those who will pay is not easily done. It costs the banks tons when a house is foreclosed on, they really do(the smart ones at least) try to avoid this. Reason being is that with changing markets such as right now when a house is foreclosed on the banks have to sell a house for less than what is owed on it. Also, banks are horrible at selling houses, it's not their line of work and it shows if you've ever viewed foreclosures. Lastly, when people get evicted they get more oft than not, super pissed and trash the house to get back at the bank. I've viewed countless foreclosures where the prior owners tore up all the carpet, took apart in ground pools, removed appliances and just completely trashed the houses. All of these combine to cost the banks lots of money when they foreclose on a property.
C. As for dropping interests rates to save loans, it is the best idea. If someone borrows a hundred bucks from you nd falls on hard times(or whatever the story may be), would you rather them give you $80 or nothing at all. Right now they're simply tryin to sort this mess out and recover as much as they can without upsetting the economy any more than it is.
As for people blaming the banks, it's a much grander scheme/problem than just them. Realtors gave people bad advice, brokers were shady as hell and did whatever with the paperwork to get you that house you couldn't afford, banks failed to properly check people, gave loans they knew they shouldn't and create loans that were simply asinine, the govt failed to step in at anytime while this boom(or bust) was going on, and last but not least, the consumer, bit off more than they knew they could chew and failed to do their homework. How do I know all this? The first two houses I bought my realtor and broker swore to me that an ARM was the best loan out there and that it would never go up (we saw how well that worked out), on my part I failed to do my homework and find out more bout these things as I foolishly trusted them. Lesson learned- Never trust the words of someone your paying.
I agree it sounds stupid, but by saying they have to reduce interest rates don't they mean they have to lower the adjustable rate mortgages back to a level where the people can afford to pay them? I agree people who signed up for ARM's are adults who should be held responsible for their own actions, but at the same time, there were plenty of banks that were predatory lenders who took advantage of peoples ignorance. I mean, there were people who had their mortgage payments go from $800 a month to $1350 a month due to the ARM rate change. Not me, I insisted on a fixed. LOL