One of the main reasons why this type of arrangement to facilitate write-offs is failing badly is that it totally ignores the other side of the loan. Banks are just set up in the middle of it.
One person's mortgage is the next one's retirement nest egg. It can belong to a pension fund, like CalPers, which is hit hard. Or it may be anything else. But the money is owed to somebody who has been counting on using it for a good purpose. This should not be ignored.
It is not just damage to the mortgage payer, but eliminating that capital does real and important damage to the larger economy.
I wish there were better answers. But, remember thqt the original TV ouburst that started the tea parties was about taxing the prudent extra to bail out extravagant and obviously unaffordable mortgages.