Not sure what side effects this could cause but it seems possible in principle.
Alternatively, you could just give all homeowners a loan instead - but this doesn't change the fundamental issue of subprime mortgages, so it would really just be pumping up the bubble further.
Yeah, I guess there's definitely a ton of side effects depending on which way you go.
However, the optics of giving banks more "free" money at the expense of "the people" is not good regardless. I wonder what would happen if the government extends almost-free loans to whoever has a mortgage.
I imagine a lot of people would use it to pay it, but probably a ton more would just use it to get a bigger TV, a car or something similar.
No way to win either way it seems.