"John Courson, president and C.E.O. of the Mortgage Bankers Association, recently told The Wall Street Journal that homeowners who default on their mortgages should think about the “message” they will send to “their family and their kids and their friends.” Courson was implying that homeowners — record numbers of whom continue to default — have a responsibility to make good. He wasn’t referring to the people who have no choice, who can’t afford their payments. He was speaking about the rising number of folks who are voluntarily choosing not to pay."

Full article here.

There's an interesting suggestion by Professor Thaler (here), for banks to agree to renegotiate with buyers if average home prices in their zip codes have fallen below 20%. That leaves fewer homes underwater and if the house ends up being sold for a profit, that is shared with the banks.

My perception is that we may well be headed for a double dip recession with another wave of foreclosures and 'underwater' owners walking away, particularly in "nonrecourse" states like California and Arizona. Banks of course, will lose out even more.

Will they agree to rework loans? Probably not. It's the greed of the monkey whose hand is trapped holding the banana and refuses to let it go and escape while the hunter calmly walks up and smashes its head in. Greed does make one stupid.

I think the real issue is not finding reasons for consumers to become dishonest, but finding ways to ensure corporate integrity. It would not be a stretch to say that most large corporations have little integrity. Lax enforcement of rules and laws have only made things worse. Contracts and obligations should be honored, but, as the recent example of Toyota shows, even companies with the best of reputations can make decisions based 100% on financial gain and not on consumer safety.