Mortgage Fix?

If I understand the Bush mortgage bailout plan, it would bail out the mortgage companies and leave the homeowner with a new mortgage that may not be affordable anyway. Nice for the mortgage companies.

Please correct me if I have this wrong.

Case: I buy a house for $300,000 and finance $280,000. My rates adjust, I can’t afford the payments, and the FMV of the house falls to $240,000. I am in foreclosure.

Under the Bush plan I get a new $280,000 mortgage and the mortgage company walks scot free.

I have a counter-proposal.

The fed issues a new mortgage of 80% of the FMV and the mortgage company eats the difference. If the mortgage company doesn’t like the deal, the company can foreclose and eat the big one, so to speak.

Make any sense?

On other notes, what happens to the folks who already lost their homes during the Bush boom? Will the DOJ and/or the state AGs prosecute all of the fraud we are hearing about? Should the government stay out of this?