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If housing prices were encouraged to crash, it would make housing more affordable and free up more money for discretionary spending. Instead prices are propped up to protect big banks from having to take losses. We should be looking at ways (strict accounting rules, forced bankruptcies, GSE actions) to force the rapid liquidation of surplus REO in order to bring down housing costs and utilize our housing stock to the benefit of the nation.

So what happens to home owners who were *not* sub-prime borrowers? What happens to their finances when they owe $170,000 on a home that is now worth only $100,000? Would this not prolong the foreclosure spiral?
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