[blade_tenner]

If people are trying to get “out of” their underwater loans, they are ending a contract that had their house up as collateral in the first place. If the banks were irresponsible enough to loan money to people for MILLION DOLLAR houses, then the banks should eat it ... and fail. Why are the banks being propped up? Certainly more competent people will rush in and take over.

[glorgau]

but what's going to end up happening is, you know, they just passed this law now where a lot of people who aren't going to sell their homes are trying to get out from underneath them because of the tax ramifications, because whatever they would have lost they woulda got back as a 1099. And so what's happening now is they've waived that, and they're now doing what's called a "deed in lieu of foreclosure."

I'm surprised that some company hasn't tried to use the theory that the 1099 risk for the loanees was an implicit part of the risk calculation for the loaner. Therefore, changing the rules and incentivizing walk-away defaults was a "taking" by the government.