"It creates an incentive for lenders to foreclose so that they can entice a buyer to use the government subsidy to take the house off their balance sheet," he explains. "In essence, the credit would bail out lenders who made bad decisions by making risky mortgages. It would also accelerate the decline in house prices. If responsible owners want or need to sell their houses, they are now competing with new and foreclosed properties that come with a $15,000 taxpayer subsidy, so they're forced to lower their sales price."

A sizable number of foreclosures, Arbury maintains, is unavoidable and the unfortunate result of the "homeownership at any cost" policy of recent years. Though it may lead to a recession, he says, the focus should be on stimulating the general economy and helping those most in need. The $9 billion that would go toward a homebuyer tax credit, he suggests, should go into the creation of affordable housing. "More Americans are hurt by our shortage of affordable housing than by the subprime crisis," he points out. "For decades, we have focused on single-family housing, but changing demographics and housing preferences are driving more people away from the typical suburban house. In the short term, we need to focus on the mortgage market and enact policies that keep people who can afford their houses in those houses. In the long-term, we need a new housing policy that tackles our affordable housing shortage and that catches up with the changing demographics that are driving new housing choices."