What Should Happen to "Underwater" Mortgages?

Barry Ritholtz offers a plan at The Big Picture:My...suggestion is to develop a plan that recognizes this simple truism: People paid too much for houses, and banks lent too much against value that simply isn’t there. The LTV needs to be adjusted to reflect this simple reality.That’s why carving out a new realistic mortgage relative to home values, plus a 10 year balloon payment for some of the