Without precedent in the modern era

The option of strategic default - underwater homeowners who can continue to make their mortgage payment but who choose to walk away instead - continues to be a hot topic of discussion and, now that it looks like the home price "rebound" may be short lived, look for that trend to accelerate ... then look for articles like this to be blamed for fueling the fire.

Joe Figliola has heard that message. He bought his house in Elgin, Ill., in 2004, then refinanced twice to get better terms. He pulled out a little money both times to cover the closing costs and other expenses. Now his place is underwater while his salary as circulation manager for the local newspaper has been cut.

"It doesn’t seem right that I can rent a place somewhere for half of what I’m paying," he said. "I told my bank, 'Just take a little bite out of what I owe. That would ease me up. Isn’t that why the president gave you all this money?' "

Bank of America did not agree, so Mr. Figliola, who is 48, sees no recourse other than walking away. "I don’t believe this is the right thing to do,” he said, “but I’ve got to survive."

What's probably most disconcerting about this particular story is the expressed view of the government where, first, assistant Treasury secretary for financial stability Herbert M. Allison concedes that they have no idea how to deal with this problem and, then, assistant Treasury secretary Michael Barr notes dismissively, "The overwhelming bulk of people who have negative equity stay in their homes and keep paying."