Under Water/Out of Kilter Mortgages--These are times which call for not only creative thinking but a fair sprinkling of empathy

The term "Strategic Default" sounds so sinister. My first image is of a couple plotting and planning to gain an advantage through treachery. It hearkens me back to the days when contemporaries of mine were finishing up their medical internship, and then declaring bankruptcy to eliminate the hundreds of thousand of dollars of student loans they were perfectly willing to walk away from. Legislation has eliminated that "loophole". It is certainly possible that the big lenders will lobby for legislation to thwart Strategic Defaults, as well.

But in my experience people choosing Strategic Defaults are far from sinister. Is it wrong for an unemployed person with a $200,000 mortgage who finds another home in his subdivision selling as an REO sale for $75,000 to stop paying on his mortgage? Is it wrong for an elderly couple to make a decision to buy their medications rather than pay their mortgage? These are real life situations, which I have seen first-hand.

I am not sure how we, as a country, can address these real issues. It would seem to me that things almost necessarily must get worse before they get better. So Strategic Defaults may. of necessity, have to be the only solution until we get through this. Most people whom I have tried to help in this situation do not have new mortgages. They are not "Sub-Prime" participants. They are simply people who situations changed, rapidly in some instances, and they have no safety net to protect them. Does not paying their mortgages make them bad people? I respectfully suggest that this is not the case.