Read it and weep. File under Department of No Easy Answers:

If the write-downs are accomplished through bankruptcy, as I expect they would be, we would save less than promised on the legal and administrative costs. And the theoretical economic benefits–increasing labor mobility, easing the downward pressure on the housing market–would be at least partially mitigated by reduced loan availability for new purchases, selling pressure from those whose mortgages have been written down, and general lack of housing demand. Plus the haphazard nature of the housing valuation process would create windfalls and tragedies that would continue to be politically corrosive.
It’s easy to see the appeal of cram-downs–they seem like a relatively simple solution that instantly sweeps away a lot of the problems we’ve had. But when you start considering the actual problems of execution, they start looking–to me, at least–considerably less appealing. I’m not saying we shouldn’t do them–as I say, I can see the arguments on both sides. But even if we did go this route, the benefits would be at best small and mixed.

I was far more drawn to the idea of cram-downs before reading this post, and my main concern was the potential impact on vulnerable financial institutions that could once again bring the economy crashing down.