Mortgage Crisis-Direct government loans to homeowners

While $$$$ is being poured to the banks that made/ pushed such crappy home loans, homeowners haven't been helped and have been foreclosed en masse.

Of course homeowners who DIDN'T buy more than they can afford, and DIDN'T used their house as an ATM to buy Cadillac Escalades and 80" plasma flat screen TV's, object to a government bailout of homeowners who did such things--though this means homeowners who didn't game the system but have been caught in the economic squeeze are left in blowing in the wind.

As our goal is to avoid foreclosures (while it is nice that I don't have a next door neighbor with their yapping dog--their brown lawn does hurt the rest of the block) why doesn't the government subsidize loans for anyone claiming hardship. For a $175,000 loan at 6% the mortgage is $1050. If the government can buy the loan from the bank and subsidize/ discount the loan to 3%, the mortgage is now $740 a month--a saving of $310 a month.

But there would be a catch to this government largess--as the program is intended to keep one in their house, not allow one to trade up and up and up every other year until they reach 5,000 square feet.. The government would become an equity lien holder in all subsidized homes--and get 20%, 30%, 50%? (based on years until mortgage is paid off) once title changes. The goal being that real estate prices would eventually rise and the feds would recoup their investment, and struggling homeowners would now have an out.