The people who have lost houses need houses.
The banks have lots of houses that they don't need or want.
The houses need people to take care of them, lest they fall apart and start losing in value.
So ... the banks should sell the houses back to their original owners at a fraction of the cost, and/or put them on sensible mortgages. The banks will probably lose lots of money if they did that, but since it was their greed that caused the problem in the first place, I don't see that as a problem.
Me : complex financial stuff :: Nathan : non-geometry math
(alternately, I like Jim Wright's plan.)