Atrios is right that the housing market isn’t going to recover while the crooked, thieving banks are all crooked and thieving.
I’m not sure how anyone expects “the housing market” to “recover” when buying a house now involves handing a bunch of money over to a bank which will then proceed to steal your house from you.
This behavior will continue until lots of people go to jail. And that, apparently, is off the table.
Of course there is another option. And that’s to make it impossible for the banks to steal your house from you. And it seems the simplest way to do that is by putting a moratorium on banks foreclosing until the documentation gets sorted out. It might increase the cost of lending since there are a number of legitimate foreclosures that wouldn’t happen.
Ideally this would happen at the federal level, but I don’t think it’s something you can get done with the current House of Representatives. So, it can happen at the states. It’s 4 years past time, but I’d like to see some creative state legislator here in Washington propose it in the next session.