Calculated Risk: Fitch Concerned about Borrowers 'Walking Away'
"...the apparent willingness of borrowers to ‘walk away’ from mortgage debt has contributed to extraordinarily high levels of early default, which is particularly noticeable in the 2007 vintage mortgages:

This is from the blog Calculated Risk. The mantra from all presidential candidates is to bail out the folks who are getting foreclosed on. I understand this is an election year, so this is to be expectd. And I agree that some people were exploited, especially first time buyers. But the other side of the argument is that a whole bunch of other people--these jumbo loan folks--had their eyes wide open and were counting on prices going up. They knew they were buying more house than they could afford, but they expected to make a killing from the bubble before they ran out of cash. Some of these folks lied about their income and did whatever was needed to qualify. When the anticipated price increase didn't happen--because the bubble finally popped--these folks were the last ones standing in the big game of musical chairs. Suddenly they were overextended, and when prices went down they had negative equity. So, they stop making mortgage payments and walk away from the house after living in it free of charge for six or eight months.

Seems to me that somebody should make the opposing argument: that the government should let the market correct itself. Prices are way too high, making home buying unaffordable for many people. If the government prevents foreclosures (as Hillary Clinton says she wants to do) won't that prevent this correction? Is any candidate making that case? I'm not saying it is the right thing to do. I don't know. But I would welcome a serious discussion about the issue.