What would be the affect of mortgage forgiveness?

Question

I'm not an economist (got a C in HS econ). But I'd be curious to know the affects of a wide spread mortgage forgiveness if the bank holding your loan goes under.

Let's say the only requirement to have your home free and clear is that you remain in it for 5 years. This would be an interesting debate. I'd think it would boost the economy because of the extra income.

Answer 1

So the taxpayers end up paying for all the mortgages held by a bank that went under.  Sounds nice but this could add up to trillions of dollars, I'd prefer the homeowners live up to their obligations - unless it was me being forgiven (making the money), them I;'m all for it.