That sounds good on paper but, from what I read about Las Vegas that will mean that a minimum of 100,000 folks who had foreclosure flilngs in 2008 and the 15,000 Bankruptcies will be pretty much barred from contributing to the economy for the next 5 years or so as they straighten out their finances. And that doesn't include the folks who are "just" behind on the credit cards and rent and car payments [another Nevada per capita record]. So all that dust that is gathering around the glitter is going to stay a while longer than expected as more businesses close as more people are not able to contribute to the economy.
And that glut in the housing market that Vegas has will just keep getting bigger and housing values will keep depressing for everyone, including those who do pay their bills.
But don't worry, when those values go down, and the tax assessor sees a reduction in tax revenue from property taxes they will just raise the rate to insure the schools and fire department and police and sewer still are functioning.
So let's just let it crash. Vegas is a gambling kinda town. I'm betting that if you just let that housing thing go and let the homeowner learn their lesson it might just come up snake eyes.
Who knows what it means. A house that sold in 2005 for 220,000, has now sold for 75,000. The bank paid 193,000 at the foreclosure. So the bank has a loss, that decreases the bank's capital, therefore the bank can't loan as much as before. The bank is legally permitted to get the deficit from the forclosuree, but that's a dead end anyway. Now who should suffer the loss? The Bank? The Mortgagee? The USA? Everyone? No One? The USA just replaces the funds into the Bank and takes a part of the Bank?
Who benefits? The person that bought the house for 75,000? Oops, houses are now selling in the same area for 35,000. The person that sold the house for 220,000? Oops he bought a house for 400,000 that sold for 120,000 and he lost the 220,000 that he put down.
Eventually it gets down to the Bank taking the loss. Hence we have the bailout. These are the facts of the case and they are indisputable.
Being Bankrupt isn't an end to participating in the economy. Some banks like it because you have a clean slate and have learned a lesson, you can still get credit but at a higher interest rate, which banks like too.
The tax assessor has the system set up so it's a long time before he sees a decrease.
Long story short, everyone has to have skin in the game, everyone has to take a hit. Just so you know it coming and can prepare.