The conservative talking point on this, is that you signed a contract and are morally obligated to pay what you owe. The Mortgage Bankers Association takes this as their official position.
But it isn't just a matter of the borrower's personal interest, says John Courson, President and CEO of the Mortgage Bankers Association, a trade group. Defaults hurt neighborhoods by lowering property values, he says, adding: "What about the message they will send to their family and their kids and their friends?"
In 2007, the Association put a $4 million down payment on their $79 million headquarters, and borrowed the other $75 million. When the market tanked and the Mortgage Bankers Association went underwater on its mortgage, they abandoned the property and rented another place 5 blocks away. In other words, they defaulted strategically. See the story from the Today Show by clicking here. The John Stewart show does a follow up, and knocks one out of the park. So much for the morality of bankers.
Strategic default, like any financial decision, should be based on fact, rather than emotion. Claiming that paying on a depreciating asset is the moral thing to do, is the bankers playing on your emotions to squeeze more money out of you.
John Stewart does another piece, and here it is.