The most important point is, in a time of crisis, there is no way out but for the government to be bold and aggressive.

In a forbearance, the homeowner pays interest and principal on a smaller mortgage, at least for a time, but still owes the full amount. The lower monthly payment helps with affordability, giving stressed homeowners a break.

Buying a home wouldn't make much sense if house prices were likely to decline further; no one wants to catch a falling knife.

In a normal time, I don't think economic policy makes a large difference one way or another. But in times of crisis it makes all the difference in the world.

Too-easy credit and millions of bad loans made during the U.S. housing bubble paved the way for the financial calamity and Great Recession that followed. Today, by contrast, credit is too tight. Mortgage loans are particularly hard to get, creating a problem for the housing market and the broader economy.

The key to house prices is the share of foreclosure or short sales in the total housing market. When that share rises, house prices will fall, because distressed properties sell for significantly less - currently around 25 percent below non-distressed houses.

There is no better way to quickly buoy hard-pressed homeowners than helping them take advantage of the currently record low fixed mortgage rates and significantly reduce their monthly mortgage payments.