Why should you care if other people lose their homes?

There's been a lot of discussion on whether or not the government should help people during the current mortgage crises. On one side of the debate there's a growing tide of people who feel that greedy speculators get whatever they deserve-on the other, a more compassionate sense of helping victims of mortgage scams and fraud.

Where's the reality? As in most cases, it lies somewhere in between.

Sure speculators tried to score big during the last real estate run-up. Now many are getting burned, and many others are walking away from their speculative investments and are burning others. How? Like stocks, when you sell a home for less than you paid for it, it is you who takes the loss. But unlike stocks, many property owners feel they have the right to walk away from a property they've lost money on and they are doing so in record numbers. This hurts everyone as a mounting surplus in foreclosure inventory brings down values. Lower values mean homeowners who are trying to refinance are finding it difficult to impossible when their values have eroded beneath them; thus causing more foreclosures and even lower prices. Ironically, lower values are just what the market needs to increase affordability and stop the downward spiral from feeding off of itself.

Many of those hurt the most are innocent victims of naiveté or even deceit and fraud. These are the folks that are losing their homes in record numbers and many are guilty of nothing more than living the American dream of homeownership.

The spillover is as banks liquidate homes to break even, they are incidentally lowering all of the property values in the surrounding neighborhood. This of course means the Joe and Betty who were planning on retiring this year with $500,000 in equity will walk away with much less, spend less during their retirement years and perhaps need to reply on social services sooner than they had expected. Scott and Stephanie who wanted to borrow some money to send their son to college will no longer be able to tap into their home's equity to do so. Mark and Alison will not be able to refinance their home to an affordable payment and will be forced to sell before the value drops where they will owe money just to walk away.

The trickle down and seemingly endless downward spiral effects continue to impact the housing markets in many areas of the country. When is government intervention necessary and when is it appropriate? The reality is the mortgage default crisis is affecting everyone and it might just be in your best interest to help others out in spite of the inclination to let the market "play itself out".

Which side of the debate are you on?