If we cram down these loans, the value of my house will go down simply because my neighbor can now sell their house for less than me. So even though I didn't need the cram down help, I'm carrying an inflated mortgage compared to him. Under that scenario, all you're doing is rewarding future home speculators to buy his home instead of mine.Judicial Cram Downs help the home owner and I have no beef with that. They give a home owner big time leverage to renegotiate loans with a lender and avoid foreclosure/bankruptcy which costs the banks more anyways so I don't see the problem.
Instead make the cramdown a 2nd lien (without a principal or interest payment) where the owner keeps a percentage of the cramdown but the rest goes to pay off the first lien. There's also the issue that it's arbitrary so hard limits need to be put in place.