The economy can't be healed until there's a treatment plan for the housing illness.

The Democratic nominee for vice president, Joe Biden, said on CNBC Tuesday that bankruptcy laws need to be changed to keep people in their homes. We're not sure about that approach, but we do think there ought to be a concerted effort to limit foreclosures.

Foreclosures are up - and home prices are dropping. On a national scale, as many as 3 million homes could be in foreclosure in both 2008 and 2009. The American Dream is stuck in a long nightmare loop. It's time to wake up.

We'd start with the return of a simple idea: renting.

There is a shared value that every family ought to have a decent home. But that doesn't mean every family should own that home. There are real conditions - such as income and savings - that are necessary before successful ownership. In a high-cost area, such as Seattle, renting is often the smarter option.

One idea is the Saving Family Homes Act, proposed by Rep. Raul Grijalva, D-Ariz. The measure would allow families facing foreclosure the option of remaining in the home as renters for up to 20 years.

Perhaps this bill can be fine-tuned to add incentives for banks to become landlords or to sell the homes to nonprofits that would manage the properties.

While renting is a good option for some, Congress should not give up on the idea of making it easier for more Americans to own their own homes. The country must continue to promote smart ownership plans that help families be successful. Seattle's HomeSight, a nonprofit community development corporation, helps low- and moderate-income families buy a house but requires financial education courses as well as a hard independent look at the family budget. Sort of what banks used to do. The federal government has a new opportunity to rethink how housing is promoted on a national level.

"Although the government has taken over Freddie Mac and Fannie Mae, it is vital that Congress and the Conservator not lose sight of the GSEs' fundamental purpose, as chartered by Congress, to expand homeownership opportunities and promote access to credit to underserved markets. This purpose continues to be of vital importance," a coalition of fair housing groups - including the National Fair Housing Alliance - said Friday. "The government has the ability to stabilize our economy and communities devastated by unscrupulous and irresponsible lending practices."

The headlines won't go away until Congress and the next president start proposing and investing in new housing ideas.

Copyright 2008 Seattle Post-Intelligencer