Stop Me Before I Vote Again

http://www.washingtonpost.com/wp-dyn/content/article/2007/04/18/AR2007041802499.html?referrer=email

Maybe some sub-primers will get the relief we called for here, though so far it looks to have the usual big bold talk and small penis one associates with these two waddling behemoths. Their function, after all, is to turn lending to us homemakers into a barrel shoot for "the private lending interests".

If it's for real, and gets really rolling, this bailout, by my seat of the pants guess, for the whole subprime quagmire, could end up needing about 20 times as much as the two Uncle-spawned and -backed outfits are dummying up here (ie 500 billion maybe 750 billion in Uncle guarantees.)

Most importantly, imo, there's a back story here, of course, provided for us by the wishywashy express, and it sure does seem to be aswim with the usual beltway smelly factoids.

My favorite: the fiercely snarling false teeth of our ever heroic tribunes, the donk house boyz, as they pressure "both companies [Fannie Mae and Freddie Mac] ... to demonstrate that they perform a public service." Demonstrate to who? Rep. Barney Frank, that's who, the man from Newton Lower Falls himself, who according to this article is making large motions about requiring uncle's two spoiled brats "...to contribute to an affordable housing fund," 'cause battlin' Barney feels "the public has not received enough value in return for the commercial advantages Fannie Mae and Freddie Mac get from their government ties."

"The public?" Hmmmmmm. Poke around in this soup a bit, and I bet there's a private label under the cover of all this "the public" business.

Note well: we often hear this stuff called a cheap Wall Street bailout, when its some sub-saharan state that's on the dunking stool.

Recall, fellow citizens: if Uncle saves an 'umble 'omeownin' defaulter, He saves the stiff's generous soft hearted creditor's arse too, don't he now?

US Housing Crash Continues
It's A Terrible Time To Buy
Why?

1. Prices still disconnected from fundamentals. House prices are still far beyond any historically known relationship to rents or salaries. Rents are less than half of mortgage payments. Salaries cannot cover mortgages except in the very short term, by using adjustable interest-only loans. Anyone who buys now will suffer losses immediately, and for the next several years at least.

MURRELLS INLET, South Carolina: Ettore and Larisa Costanzo are showing off their new house, which they love madly.

"Notice how we upgraded so there's tile on all the floors," Ettore Costanzo, a retiree from Brooklyn, said.

Now if only they could get the keys and go inside...

Their builder is Levitt & Sons, which ran out of cash in October and declared bankruptcy in November.

Here's a bit of thumbsucking from the Washington Post:

Everyone knows the direct causes of the present housing collapse: low interest rates, lax mortgage lending, rampant speculation. But the larger force lies in Americans' devotion to homeownership. It explains why government officials, politicians and journalists (including this one) overlooked abuses in "subprime" lending. The homeownership rate was approaching 70 percent in 2005, up from 64 percent in 1990. Great. A good cause shielded bad practices. The same complacency lulled ordinary Americans into paying ever-rising home prices. Something so embedded in the national psyche must be okay.

I never cease to be amazed at how much Left discourse accepts the idea that house ownership is a good thing, and I'm dismayed by all the Left handwringing about the bursting of the speculative bubble. I hope it bursts so far and so fast it puts people off buying real estate for a generation.

http://robertreich.blogspot.com/

'Twould appear the great American home lot collapse has Bobby in its spell, 'cause now he figures without the borrow-on-tomorrow two-step provided by ballooning property assets, there's just not enough effective demand out there to go around -- at least not enough to keep our consumer market bells ringing lustily away. Hence RECESSION -- maybe worse....

And what of this Congro-confected interim stimulus package? Well, sez Bobby, if you looked at it from the point of view of every underwater householder, it's got serving sizes maybe two sizes two small. And then there's the deficit we'll need to cover the shortfalls -- where's the funding for that to come from, in a country that's not saving even the spared dime?

[cue ominous sub-Wagnerian monster music] -- "overseas"! The horror!

Bobby, keep your shirt on. Warm up some milk. Read Lerner and Vickrey.

http://latimesblogs.latimes.com/laland/2008/01/a-tipping-point.html

A tipping point? "Foreclose me ... I'll save money"

A homeowner who can't sell his house tells the L.A.Times, "Foreclose me. ... I'll live in the house for free for 12 months, and I'll save my money and I'll move on."

Banks and lenders fear this kind of thinking -- that walking away from a house could be the smart economic move -- appears to be on the rise....

Calculated Risk notes this is "one of the greatest fears for lenders ... that it will become socially acceptable for upside down middle class Americans to walk away from their homes."

The evil hillbilly mage behind this blogsham (pictured above) had an initial instinctual reaction to the house lot bubble bust: "If yer under water -- if yer upside down -- stop paying and walk away."

The stop-payments walk-off war is well into its third or fourth round now, and Uncle is preparing a remedy: "restructured mortgages".

Yes, Mr and Mrs Delinquent, before you morph into Joe and Jane Commonlaw Squatter, Uncle wants to help you stay in your home and own it too. Legally, like. Not by raising your cash flow to meet your payments, but by hammering down your payments to swim more easily through your cash flow.

Well, rangers, this oughta be fun. Imagine ole Snidely Whiplash caringly easing your burden -- voluntarily?

Sure -- if Uncle uses the national credit to insure the principal.

They're talkin' millions of mortgages here, and of course hundreds of billions of "face value". Not that much money, really -- though we'd all like to have a substantial piece of it. More importantly, imagine the interclass ruckus this would induce: Hey, why them layabout louts, and not us upstanding job-holding toil critters? Wedge politics at its finest.

Sum-uppin's: it's the N birds with one stone department. Stop the walk-away freight train to nowhere that credit grinders can getcha. (Freedom's just another word for no credit left to lose.) And for that, you get as bonus: one, the above venerable wedge amidst the exploitables; and two, you prop the collateral that is the lodestone of job loss fear Oh, and, err, three: you save America for exploitations yet unfound.

There seems to be a lot of back-and-forth just now about whether to include, in the "stimulus" package, a $15,000 tax credit for people who buy what I call a "house", but which conventional diction calls a "home".

Now this credit will not, of course, be available to renters.

Or, for that matter, to people who stay in their present home, or house. No. We can't stand pat. Buy a new home, or house -- or the terrorists will have won!

The Senate seems to be very keen on this idea:

The U.S. Senate on Wednesday voted unanimously to approve a home buyer tax credit of $15,000 or up to 10 percent of the purchase price... The amendment to the Senate’s economic stimulus package [was] co-sponsored by Sen. Johnny Isakson (R-Ga.) and Sen. Joe Lieberman (I-Conn.)....

Isakson... spent more than 30 years in the real estate business....

Note that word "unanimously". So the Dem majority -- fruit of the Last But One Most Important Election In The History Of The Universe -- and the defeated forces of darkness, the orcs of the Republican Party, are entirely on the same page here.

This profoundly bipartisan particular measure will spend about $35 billion -- let me write that out: $35,000,000,000.00 -- of our dollars to encourage Joe Schmo to keep speculating in real estate.

Because if Joe ever stopped -- Christ, where would we be?!

So.... will Obie sign it? Bets, anybody?

From Reuters:

Obama to unveil foreclosure plan, big lenders wait

U.S. President Barack Obama will unveil a plan to stem home foreclosures on Wednesday, a spokesman said, and major U.S. lenders said they had stopped foreclosing until details of the program have been firmed up....

Bank chief executives said at a Congressional hearing earlier this week that they would agree to temporarily halt foreclosures until the White House can unveil a program to help mortgage borrowers....

A suspicious person might entertain the thought that the bankers are maybe not all that happy about the idea of owning tens of thousands of unsaleable piece-o-shit McMansions. Perhaps... they'd rather not foreclose? Perhaps they prefer debt slavery, on a mass scale?

A Reuters report on Thursday of the Obama administration's mortgage plans triggered a U.S. stock market rally.

The National Association of Realtors said on Thursday that sales of foreclosed homes helped drag the median price of existing homes to its lowest level since 2003.

"Mr. Obama has unveiled a,,, plan to prevent as many as nine million Americans from losing their homes."

Translation: 9 million rubes hornswoggled into keeping the mortgage monkey on their back.

Here it is, Mr and Mrs Honest Godfearing Dumbcluck -- Uncle's helium rescue: re-fi credit balloons to lighten that nasty house on your back. Imagine! Up to 105% of market value!

Underwater never felt so good.

"Moody's Economy.com says nearly 27 percent of America's 52 million homeowners with a home loan owe more on their mortgages than their homes are worth."

Hmmmm. That's a big negatory, good buddy. What we job goons really oughta do is not pay as we go till we get relief, but walk away free now, all of us, and rent back each others "homes" from the foreclosure ghouls.

Free at last! Free at last! Thank God almighty, free at last!

Why continue this game of pass-it-along, anyway? " In whose pocket -- after all -- does the money end up?", as our dear backwoods troublemaker, Father Smiff, is wont to add.

The kissin' cousins, Fanny and Freddie, got something too out of Obie's "keep our mortgages flying" program. Ask the Washpost, they'll tell ya:

"The federal government yesterday doubled its commitment to Fannie Mae and Freddie Mac, promising to reimburse the companies for up to $400 billion in losses on their investments in mortgage loans. "

It's on the loan portfolio front, however where you get to see clearly "feeble is as feeble does." Though Obie has authorized a new higher limit on mortgages the two can "buy", the total is way way way too low. The buy limit oughta be -- well, unlimited.

No problem here. The master plan already calls for "The Treasury -- to buy securities created by the two companies, easing the pressure to find private investors."

And we all know the Treasury has no credit limit. So why not swing for the fences here? In plain fact, these two chubby chillin' of our dear uncle Sammy could buy up all the residential mortgages in America, all 10 trillions worth, and we'd each of us citizen taxpayers be the better off for it.

More on this in a future post.

Folks brought up on the Bible -- as I was -- will recall the surly older brother in the parable of the Prodigal Son. (I think he's the scowling chap next to the sawhorse on the right in Tissot's lovely picture above).

The Prodigal took his inheritance and went catting around the ancient Near East, spending his substance in riotous living.

The elder brother, good dutiful fellow that he was, stayed home and did his duty.

When the Prodigal finally returned home, and was met with rejoicing by his Pop, the elder brother was understandably aggrieved.

The story, as told by its distinguished author, puts the elder brother obscurely in the wrong. But perhaps because I am an elder brother myself, I always felt a certain sympathy for the sullen, pouting non-prodigal.

These old memories have come to the fore recently as I read about the mortgage bailout. Here's a sample from the Boston Globe:

Bailout lament: What about me?
Many who played by rules see unfairness

Brian Carpenter bought his Woburn home [sc. 'house' -- MJS] in 1980, and 29 years later, he has never missed a mortgage payment. It wasn't always easy. With three kids, it meant driving old cars, clipping coupons, and brown-bagging it to work.

Now, he sees the federal government committing nearly $1 trillion to bail out banks and struggling homeowners, and nearly $800 billion to offset economic damage caused by reckless lending and borrowing. What's in it for him? Probably $13-a-week, the middle-class tax cut in the stimulus bill.

"What about people like me who are playing by the rules, who got a mortgage we could afford?" said Carpenter.

The other day on NPR -- I was driving at the time, that's my excuse -- some "economist" was trying to explain this problem away. One of Mr Carpenter's fellow-elders had called in with precisely the Carpenter complaint: Where's the justice here?

The "economist" gabbled and stammered. For quite an agonizing long time. I nearly drove off the road, I was laughing so hard.

Finally the "economist" came up with his answer: it's not about justice, it's not about fairness, it's not about keeping the promises the system made. It's about saving the "system" itself.

To the "economist", this seemed like a pretty good response, no doubt. But I wonder whether Mr Carpenter will be convinced. If I were Carpenter, I would be asking myself whether virtue is really worthwhile.

Personally, I asked this question years ago, and answered it in the negative. But this was a quirky non-standard contrarian response, back then. The "system" seemed to have a certain moral authority at the time.

The moral authority is now shot. It's clear what the "system" was about in fact. It wasn't about rewarding virtue. It was about encouraging speculative frenzy.

Saving the system means: let's keep the suckers speculating, at all costs. Virtuous or not, they must stay in the game. Or all is lost.

Will that work, I wonder, if the moral story that the Carpenters like so much is undermined? Didn't the scam need that?

I guess we'll find out.

Meanwhile -- where did I put that damn fiddle? All this moving around, from rented anthill to rented anthill -- it's next to impossible to keep track of what little movable property you have.

My peerless leader, Snuffington J Smiff, finds uncle in the land loan biz a perfect horror. Well, consider the following, one and all, including you, squire Allsmiffy:

Okay, so Mr and. Mrs Sprawl need a place to store their household savings.

Well there's precious metal, and there's land, the classic stores of wealth.

We'll skip metal and go straight for land -- specifically, land in the form of a house lot, as that's overwhemingly the chosen path of plebian folks like the Sprawls, particularly here in the land of amber fields and parking structures.

As a store of wealth house lots are a pip, so long as a householder sticks to the Polonian way and remains free and clear of debt, or at least strives to become polonian by paying the mortgage off.

The free and clears come in at about one-third of our 75-million strong fleet of house lots these days.

Now comes a big down market, and these small taters are still free and clear -- even if in real terms they've taken a hit to their stored wealth (gold would have survived).

But the other two thirds face a bigger risk if their lot's market value falls far enough -- since their mortgage's outstanding principal, of course, doesn't adjust to drops in asset market values. Cometh the great panic -- and they're suddenly operating out of a sunken house, wealth-wise -- a tethered submarine, financially speaking: no longer a store of wealth but a mere hideous little debt sump.

What now?

The tale obviously starts and ends with its genie:

Uncle is said genie, a one-wish wonder: the magic market trick called Capitalized Ground Rent, CGR for short -- is CGR a particle or a wave, rent or interest? Both -- capitalized ground rent or amortized lot value, six of one, half-dozen of the other. Ground rent is the market value of a certain number of square feet of ground space in a certain location for a certain period of time. It's ultimately linked to its use value, of course, which itself partakes of the intricacies better left to Clio.

The rent or its interest payment equivalent is a social product, optimally captured by society and not left to households, anymore than it oughta be left to the Duke of Westminster.

Conjecture: the episodic undulations of ground rent are best ridden by the whole people together, with individual variations of guile and fortune playing a minimalized role. So how do we construct a raft for all of us -- how can we float as one, together above the inevitable unforeseeable complexity of 75 million lots all being hit always with these highly variable local value waves?

Answer: Uncle should make each of us an offer we can't refuse -- a mortgage on our lot value with a super-submarket interest rate, no principal payments until sold, fully transferable, etc.

Upshot: Uncle eventually caputures all the lots in America as if he'd nationalized 'em, and and he becomes our landlord.

A few yeoman holdouts? So what? I bet even of the 25 million free-and-clears we'd seduce most.

The point is: once Uncle holds the paper on all the lots, Uncle can control their value. In fact, over time, the Sprawls will only think about what they borrowed on the house itself (as opposed to the lot) as a mortgage. The lot value will look like a land tax -- yup, George time in America, folks!

Whoa up, there, Owen, you're saying -- what about the store of wealth bit?

I lied about that. It was just a teaser to draw in you Scotsmen and monkish acolytes of the abstaining wet-blanket cult.

Forget it! Forget saving! Like hair shirts, it's for suckers. Given my ultraloose Uncle-backed credit systems, Owen kills savings like Macbeth killed sleep.

Old monster Luce's flagship has a beaut of a piece:

Jobs Are The New Assets

"Remember when jobs weren't worth your small talk? Think back a year or two.... You talked about your house. A new deck! You talked about your portfolio. Gotta go small cap. Did you mention how much pleasure you derived from bringing home a steady paycheck? Probably not.... Land was valuable, and capital was valuable, and labor — who cared?"

Now here at the dawn of die Obamazeit with our cratered 401K/IRA "portfolio" and our house treading the waterline, our shitass jobs are all we got -- again. Its like 1946 all over -- err, only different; we ain't got no CIO.

Let's take the Wayback to the beginning, the time before Reagan time, to the cold war, the one Harry stared and Nixon won by going to visit his co-victor Chairman Mao.

The kulacking of America's blue-ribbon wage earners began with the great migration out of the urban apartment and onto the family house lot in Sprawlville. Okay, so you're still William Bendix, Brookyn wage smurf, but now you got a front lawn and a back yard of your own.

Beats hell out of stickball, rooftop picnics, and the iceman shtupping the wife, eh?

Here's the gimmick turned miracle: by 2006 those house lots -- now owned by Homer Simpson, not Chester A. Riley, are worth megabucks -- or thereabouts. Like a magic tree growing over the years in the back yard, suddenly the fucker's yielding golden apples. The credit line running off that lot's appreciation in value by '06 is getting Homer a 9% "lifestyle raise". Life is sweet!

...That is, until yesterday when the great lot pop exploded. Oh well, I still got my 401K -- except it's now more like a 201K.

Looks like it's back to being just that good old peculiar commodity again. Welcome back, 1946!

It gets me to ruminating. Back then, America's white wage smurfs took a path away from the CIO class model toward the BYOB model -- that is -- the Build Your Own Business model, though the phrase has to be understood in a perverse sense. It means build some other offsite bunch of ass holes' business, by cultivating your inner professional, that guy or gal you make yourself over into, by acquiring skills and, better yet, credentials. That's your business, and it don't matter if you're counter help or a wily commission sales harpooneer.

Your business is best done inside a bigger limited-liability outfit -- BYOB don't mean Be Your Own Boss. Just upgrade yerself, pard.

My grad school idol, Gary "The Pecker" Becker, shown above, turned this caper, this investing in ourselves, this building a deck onto ourselves rather than our house, into a career, and gave it a name -- "building our human capital." In fact he got a Swedish dunce-cap award for his "modeling" of it.

So there you are, all you have-hopers: what'll you be? A commodity or a capital? A "professional" or an honorary wetback?

It's America. You're free to choose, hombre.

I just saw Michael Moore's latest effort. It's not really about capitalism as much as foreclosure, American style -- yup, good ole sheriffs-comin' foreclosure -- and, as we used to say, "the fightback".

Fightback ain't easy -- so is there a lighter way? Uncle offers hope these days -- right? A plan for us, even for the least of us.

Here's Liz Warren's update on Obie's mortgage mitigation program, and here's the delightful Miss Warren herself as talking head:

Her report gives us a sense of just how likely it will be that us 'good people' facing foreclosure ahead will be rescued by Uncle Sam:

"From July 2007 through August 2009, 1.8 million homes were lost to foreclosure and 5.2 million more foreclosures were started. One in eight mortgages is currently in foreclosure or default. Each month, an additional 250,000 foreclosures are initiated. [Current levels of funding] will support about 2 to 2.6 million modifications. But if foreclosure starts continue their push toward 10 to 12 million, as currently estimated, the remaining losses will be massive."

As Warrens's posse sees it, there are three things that don't look promising about the setup:

"First is the problem of scope.... The second problem is scale.... The third problem is permanence"

My squint on this: HAMP -- as this 7th cavalry program acronyms itself -- looks like the Katrina helicopter roof rescue so nicely folded into Moore's montage:

Bottom line: I suggest stick to 'fight back'. Unlike Uncle's doubletalk flimflam, plain old fightback scales up nicely, scopes out limitlessly, and permanence is its middle name.

From Reuters. No comment needed:

Foreclosed Couple Detain, Torture Loan-Modification Agents

LOS ANGELES (Reuters) - As Los Angeles housing advocates launched a campaign warning of mortgage rescue scams, a couple hit by foreclosure are charged with torturing two loan-modification agents they suspected of fraud, authorities said....

"The two allegedly sought loan modification assistance from the victims but believed that nothing was being done and wanted their money back," a statement from the district attorney's office said.

[DA mouthpiece Shiara] Davila-Morales added that the couple, according to investigators, believed they had been swindled.

----------------

Editor's note: And so they have, of course, like every other so-called "homeowner" of less than 40 years' standing in North America. Why, I wonder, aren't all the others responding in such an appropriate way?

Population, 1959: 180 million

Population per unit under construction: 120

Population today: 300 million

Population per unit under construction: 600

From the Wall Street Journal:

One in Four Borrowers Is Underwater

The proportion of U.S. homeowners who owe more on their mortgages than the properties are worth has swelled to about 23%, threatening prospects for a sustained housing recovery.

... as the Lord Humungus, shown above, once memorably advised.

Dean Baker, alas, though he's a fine fellow, is no Humungus. In a recent Counterpunch piece, El Dino has caught the smell of welfare-queen bankster handout number 13 in the recent POTUS mortgage relief plan. Dean sets it up nicely:

"Homeowners are effectively throwing money away every time they make a mortgage payment... the Center for Economic and Policy Research calculated that a family who purchased a small home in Los Angeles near the peak of the bubble could save $1,640 a month by renting rather than owning. This comes to almost $20,000 a year. In Phoenix, a family who purchased a home near the peak of the bubble could save $420 a month or $5,000 a year. In Miami, the savings would be $1,940 a month, more than $23,000 a year... These homeowners also have no reasonable prospect of ever getting equity in their homes. In many cases they are 20 or 30 percent underwater, possibly owing over $100,000 more than the current value of their home."

Nope. Dean wants the geefs and geefettes to be able to rent back their present "owned" digs for ten years at today's lower rental ratess.

Hmmm. Not gonna happen. The POTUS has a different remedy: why not have Uncle pay down a chunk of the mortgage? Reduce the nut, make it easier to carry. Hold the phone, our man sez:

"If the government pays for a mortgage modification where the homeowner is still paying more for the mortgage than they would for rent, then the bank gets a big gift from the government, but the homeowner is still coming out behind."

But we want walkaway to accelerate, so we unlike Dean, want all underwater households to bug out son-of-sam style today, all at once, and then go out and rent each others' houses at market rates from the banksters. Now there's a fearful symmetry for you. Why is our magic president talking a big bundle of buy-down money anyway? Maybe it's a twofer: one, it hands money to the banks they'll never collect otherwise; and two, it might slow the walkaway movement with a fusillade of false hopes -- which are, after all, something of an Obama house special.

From the Daily Telegraph -- of all places -- a long-standing fantasy of mine, realized:

US cities may have to be bulldozed in order to survive

Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic "shrink to survive" proposals being considered by the Obama administration to tackle economic decline.

The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.

Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area.

The radical experiment is the brainchild of Dan Kildee, treasurer of Genesee County, which includes Flint....

Mr Kildee, who has lived [in Flint] nearly all his life, said he had first to overcome a deeply ingrained American cultural mindset that "big is good" and that cities should sprawl – Flint covers 34 square miles....

The local authority has restored the city's attractive but formerly deserted centre but has pulled down 1,100 abandoned homes in outlying areas....

Already, some streets peter out into woods or meadows, no trace remaining of the homes that once stood there....

"Much of the land will be given back to nature. People will enjoy living near a forest or meadow," [Kildee] said.

I love the idea of those sheetrock streets going all bumpy and unmaintained under your wheels, as you drive your car ride your bike out of the tiny village center. If you forge incautiously ahead, you begin to see weeds growing up through increasingly treacherous cracks in the pavement.

Soon you have to leave your car bike and continue on foot. Finally the mulberry bushes and the brambles have blocked the asphalt completely. You can still discern the line of Airport Road, a notch in the woods where the trees are not quite so high, yet, as the trees on either side, in what used to be the yards of American Dream houselots.

Unless you've brought a machete, you can't follow the road any farther.

Oh, there will be deer tracks, and if you're willing to go on all fours, you can creep through the little low tunnels that the wild boar have made in what was once the Airport Road Mall. That's if you're not too worried about encountering a wild boar -- and my advice is, you should be.

Not to mention the wolves.

Next: New Jersey. And then... Westchester!

In the soap opera of petty commercial matters, if the Wall Street Journal covers it, then something has long since become so widespread it can't be ignored any longer. Note this headline:

American Dream 2: Default, Then Rent

"Analysts at Deutsche Bank Securities expect 21 million U.S. households to end up owing more on their mortgages than their homes are worth by the end of 2010. If one in five of those households defaults, the losses to banks and investors could exceed $400 billion. As a proportion of the economy, that's roughly equivalent to the losses suffered in the savings-and-loan debacle of the late 1980s and early 1990s.

The flip side of those losses, though, is massive debt relief that can help offset the pain of rising unemployment and put cash in consumers' pockets.

For the 4.8 million U.S. households that data provider LPS Applied Analytics estimates haven't paid their mortgages in at least three months, the added cash flow could amount to about $5 billion a month...."

"... an injection that in the long term could be worth more than the tax breaks in the Obama administration's economic-stimulus package."

I hate to report this, but the Father Scruffle Smiff 'just walk away hoss' spiritual revival movement has not as yet really caught fire. Seems way too many folks are still not taking the rational option of strategic default.As an inquiringly-minded NYT columnist notes:

"Millions of American homeowners are “underwater,”... In Nevada, nearly two-thirds of homeowners are in this category. Yet most of them are dutifully continuing to pay their mortgages, despite substantial financial incentives for walking away from them"

"In a report prepared for the Department of Housing and Urban Development, Susan Woodward, an economist, estimated that home buyers in such states paid an extra $800 in closing costs for each $100,000 they borrowed. These fees are not made explicit to the borrower, but if they were, more people might be willing to default, figuring that they had paid for the right to do so."

Speaking of hidebound prig-sticker morality, here's my idea of a real asswipe doing a no-harm no-foul flyby on this whole business. It's from the industrious quill of none other then Mr Mark Thoma of the Thomatic poisoning site 'Econo Mist View':

"I think that people in non-recourse states understood the option a bit differently... If medical costs wipe you out, if the demand for the widgets you produce falls permanently causing you to lose your job and also have trouble finding a new one, or if other things out of your control cause you to be unable to pay your mortgage, then you won't lose your car, furniture, heirlooms, etc. in a forced liquidation to pay of as much as possible of the remaining balance on the housing loan. Non-recourse protects you fro losing everything. But a change in the price itself wasn't part of the deal. You get to keep the upside, but have to eat the downside-that's how it worked and you knew that going in. At least, that's how I always understood the implicit deal (enforced in part by a fear of losing access to credit in the future, social norms, etc.).... Following this implicit rule lowers costs for everyone..."