Even before the House of Representatives rejected the Treasury's $700 billion economic bailout package yesterday, many builders were wondering how the plan would help them with the challenges they are facing.  
As those in the housing industry know too well, those obstacles include high numbers of foreclosures, all available at prices far below new homes; stringent mortgage lending conditions; continued job losses; and skittish consumers worried about both the value of their current home and the possibility of buying another.
It's an undeniably complicated solution to solve, especially given the larger economic backdrop. "This has more dynamics and variables to it than any cycle we've been through," says Bob Hawksley, president of Fischer Homes in Cincinnati, who estimates that, in combination with boss Henry Fischer, the two of them have been through as many as eight housing downturns.
Larry Webb, chief restructuring officer for LandSource, agrees with Hawksley about the complexity of the current housing and economic crisis. "There is no silver bullet," says Webb, formerly of John Laing Homes. "Foreclosures must be absorbed, inventories must be reduced, financial institutions must be stabilized, and the economy must be strengthened."
So, with the bailout in limbo, the stock market in freefall, and the housing bill's $7,500 tax credit a non-starter ("That was dead on arrival and didn’t help anyone," grumbles David Brown, CEO of Brown Family Communities in Tempe, Ariz.), we decided to go to the experts on the American housing market--builders--and ask them what they would do to stimulate housing demand.
What would BUILDER readers address first? Foreclosures. "What we need is a dramatic program to reduce foreclosures and keep people in their homes," says Arizona builder Brown, who points out that 49 percent of homes currently being sold in Phoenix are foreclosures.
Such homes represent an incredibly difficult source of competition for new-home builders. "Foreclosures have to get back to pre-crisis levels," says John Wieland, founder of John Wieland Homes and Neighborhoods in Atlanta. "In our locations, it is foreclosures that are driving prices down. If a bank which has never seen the house is willing to take $100,000 less than what that (perhaps three- or four-year-old) house costs new, it’s tough to sell new. Impossible, perhaps."
John Walker, CFO for the Seabrook Land Co. in Washington State, agrees. "I would focus on reducing the number of foreclosures. Prices are continuing to drop because we have not been able to reduce inventory. Even though housing starts are way down, foreclosures are way up, which is keeping the inventory levels high."
Walker, like others, believes foreclosures could be stemmed if there was a large-scale program to renegotiate or refinance mortgages for financially strapped homeowners. "I would set up a homeowner workout program, where homeowners could refinance their debt at an affordable rate," he says. Especially if the government plans on buying the debt, it would make sense to set up a program that would ensure the principal gets repaid."
So does Wieland. "I think there should be a way for people who want to stay in their home and who can develop a credible plan to eventually pay their mortgage and be able to restructure their loan and avoid foreclosure. As for the deadbeats who haven’t paid and don’t plan to pay their mortgage--throw them out."

Learn more about markets featured in this article: Phoenix, AZ, Los Angeles, CA, Atlanta, GA.