In this paper we propose a Good Asset Purchase Plan (GAPP), as a cure for the falling U.S. housing market and a stimulus for economic recovery. The central theme of the plan is that the U.S. Government directly purchases minority shares (say, up to 20%) of good assets such as residential properties and farm land. The Government’s minority shares are equity investments in real assets, not loans to the homeowners. GAPP will reduce household mortgage debt and increase available fund for investment, thus effectively stem the foreclosure tide and revitalize the housing market. This paper presents a set of coherent principles, and performs mathematical analysis of GAPP refinancing for three classes of homeowners, according to two criteria: (i) whether the level of homeowner equity drops below 20%, and (ii) whether a mortgage is performing.We estimate that up to $1.25 trillion is required to fund GAPP. The U.S. Government can finance GAPP through debt issuance backed by shares in acquired real assets. The funding will not increase the budget deficit or the net national debt, thus will keep the long-term integrity of the U.S. dollar intact. Under GAPP, vast amounts of liquidity will be released from good assets and flow into the real economy. With $1.25 trillion total government investment, there would be an estimated $5 trillion stimulus impact on the U.S. economy. Further, GAPP can serve as a macro-economy tool - the Government can adjust the size of its minority shares as a lever to counter economic cycles. GAPP also will help restore the health of the ailing banking sector by strengthening the surviving banks. When a large number of home mortgages are refinanced through GAPP, it will expedite the cleaning up of banking balance sheets by sorting out non-performing mortgage loans and hard-to-value mortgage securities. The surviving banks after this process will be strengthened, and will play an important role in GAPP implementation, by underwriting new loans and administering the Government’s minority shares of real assets.