“At the risk of advocating government regulation, this problem could be avoided in the future if it was made illegal to sell home mortgages, or for anyone who is not an employee of the lender to receive a fee for originating a home mortgage. If homebuyers had to go directly to a bank to apply for a mortgage, and the bank knew it would be stuck with the loan until maturity or sale of the property, the banks would be very careful about who they lent to and on what terms.”
Your solution would crash the market for possibly decades. Your cure is far worse than the disease.
I suspect other factors would prevent such a long term “crash”, because the market would quickly evolve to fit the new playing field. And keep in mind, we’re probably looking a pretty huge crash as it is. What a policy such as I suggested would do is prevent another massive bubble built largely on fraud, that will inevitably burst. Certainly the phenomenon of builders churning out huge fancy homes by the thousands, into a market where the only “buyers” are people who can’t afford them, would vanish.