As painful as it may be, letting the housing and mortgage markets sort out these problems on their own would be best for the economy in the long run. Large-scale government interventions are not necessarily the best policy responses, although those made truly needy by this crisis need to be helped.

An unprecedented amount of aid was extended by the Treasury, Fed and FDIC to companies, agencies and individuals. This aid was necessary and, in many cases, will return a profit to taxpayers.

Lower interest rates can make mortgage refinancing a good idea, but borrowers need to pay attention to more than just the monthly payment. Cash-out refinancing is especially tricky because it entails taking on a larger mortgage. This can lead to a greater repayment burden in the future.

As the laws vary from state to state, so does their impact. In some states, the high-cost mortgage business appears to have shrunk. But in other states, the opposite has occurred.

What the Fed said last year it could do if deflation surfaced was one thing. What the markets heard was another. The result was mania in the bond and mortgage markets.