Today, The New Bottom Line released a report detailing a solution to the foreclosure crisis.  “The Win-Win Solution: How Fixing The Housing Crisis Will Create 1 Million Jobs” details how we can fix the housing crisis and revitalize our communities and economy if the banks were to lower the principal balance on all underwater mortgages to current market value.

One in five Americans owe more on their mortgage than their home is actually worth.  Collectively, underwater homeowners will have to pay down $709 billion in principal before they can start building equity in their homes.  Every effort to reboot the housing market to date has failed because it has not done the most essential thing: reduce the massive debt load carried by underwater homeowners.

Senator John McCain on Meet the Press August 7, 2011:  “But remember, it was the housing market that triggered this crisis. We put liquidity into the financial institutions and obviously they’re doing fine. They’re sitting on a trillion and a half of cash that they’re not spending. But the reality is that the housing market is what triggered this crisis, and it’s going to be the housing market that recovers. And that means to me, go out and buy up people’s mortgages as we did during the Great Depression, and give them a mortgage that they can afford the payments to make, and then we will begin to come out of this problem. And by the way, on the S&P thing, don’t shoot the messenger. Is there anybody that believes that S&P is wrong in their assessment of this situation–the fiscal situation of this country?”

[Editors note: Actually, Senator – the housing market did not trigger the crisis.  The Wall Street fraud and securitization Ponzi scheme was discovered by investors who sued the banks and stopped investing in securities…that’s what triggered the crisis.  American homes were just a vehicle used to bait investors.]

Visual Excerpt from Win Win Solution:

Dear Senator McCain –

Let’s not forget to regulate the derivatives that caused this economic depression.  Without the regulation of derivatives and corrections to Wall Street, is it axiomatic that investors are not coming back to the market until there is adequate oversight.  If we are going to turn the economy around we need to level the playing field and fix the market that took us under.