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I have watched with amazement as one plan after another has been implemented and failed. The failure leads to more and more market value loss, retirement value loss, job loss, increasing credit default swap payoff and more.

One loan modification plan after another, and not a single one actually benefits anyone, so it seems.

Rather than cram down loans, modify the calculated interest from the Rule of "78s" to simple interest on all loans and reduce all home loan interest rates to 4 percent.

Outlaw any future "78s" loans.

Roll back one year; this simply transfers the money paid from interest paid to the bank back to the borrower. The bank gets to modify taxes paid or take income reduction against future income.

Benefits:
1. Increases equity in all loans and puts the home owner on a path to equity.
2. More equity reduces toxic assets on the bank books
3. Which also restores value in banking stocks
4. Which leads to less credit default swaps failures

One example: current home owner with an interest-only loan; under a "simple" interest-converted loan, a payment of equal amount would actually have money towards the principal, thus reducing the toxic asset on the bank's books without wiping out the loan value.

Second example: Unsecured credit-card debt is out of control and will be the next "housing" default. Converting these will reduce the primary debt.

The upside for the banks: if a borrower retains the loan past the 50 percent loan time, nothing is lost in interest, the conversion simply reduces interest income during first half of loan but actually increases interest income in the second half of loan terms.

Second upside, on secured loans banks quickly move into an equity situation on upside-down loans and so do homeowners returning value to existing toxic and foreclosed homes.