Why massive bankruptcy? Are they all suddenly unable to make their payments simply because their house may not be worth what they thought it was?
"Are they all suddenly unable to make their payments simply because their house may not be worth what they thought it was?"
No. It's because - all of a sudden, someone pushed over the first domino in the line and now the company the homeowner depended on for an income with which to make the payment has lost it's butt from diversifying it's assets into the real estate market.
When these thing happen, they don't just happen in a vacuum. All the markets are tied together in some form or fashion. What affects one affects all in one way or another. We're talking about a few million people who wake up one morning and realize they owe $500,000 on a piece of property that's only worth $450,000.
What do you do when your car costs more to operate than to replace? What would you do if you couldn't replace it? You might keep driving it for awhile, hoping things would get better but would you keep pouring money into it for three years? If so, I have a Honda in my back yard you might be interested in.