California is to mortgage lending what Chicago is to pork bellies. For years, that meant it was a place with soaring house values; today, the foreclosure rate across the state is twice the national average and going up fast. Riverside County, outside Los Angeles, may be the foreclosure capital of the country, with a rate close to six times the national average. And housing prices are in free fall.

California should be the poster child for a mortgage-loan bailout. In few other places have so many taken on such onerous debts with so little equity. Unfortunately, the crisis in California is going to get much worse, and no bailout will solve it. Why? Because if the first stage of the foreclosure crisis was about people who could not afford their mortgages, the next stage will be about people who have every reason not even to try to pay their mortgages.

For the rest of the story go to http://realestate.msn.com/Buying/Article_slate.aspx?cp-documentid=6914731

There is an Answer and  "You Saw it Here First" !

A way to Slow the Foreclosures, Slow the decline in prices and Encourage Homeownership!

I haven't heard any proposals on this one yet, but it the least costly to the Government (The Tax Payers) and It is not a "Bailout" !

1. Give a "Double Tax Deduction" on income taxes for interest paid on home loans to anyone who has set a home loan in place since 2005. This will give more spendable income to those possibly facing foreclosure, enabling them to make their payment and a huge penalty by loosing that "Double Deduction" should they walk away from their home loan.

2. Offer that same "Double Interest Tax Deduction" to any home buyer who is currently a renter or non homeowner as well as to individual, hands on investors, that purchase homes, with cash downpayments, for holding long term. This will put more buyers into the market and in many cases, if not "Stop the Free Fall" of home prices.  It will most likely slow the decline greatly or even return to slight positive appreciation in those less volatile markets. This would work even better in states like California to offer the same tax break for the high state income taxes.

3. Send this solution and link to all of your Local, State and Federal Government Representatives.  Or, respond, and tell me why it wouldn't work.  Remember to tell them that you heard it here first.