"Is it irresponsible to walk away from a home that's worth less than the mortgage? "

Deep down it feels completely immoral to do that.

But, if the shoe were on the other foot and if the mortgage holder had a legal way to take extra money from the homeowner, he/she would surely do that.

If it's advantageous to walk away, threaten to do just that and see if the mortgage holder will renegotiate. If not, walk.

But be nice about it, and show some integrity. Do not steal appliances. Do not trash the home.

I agree with Mark's comments, though in my neighboorhood, there are speculators that bought these places, never made 1 payment on their mortgage or their HOA fees then when the bank forecloses on them, they steal everything inside. In my opinion this is theft. They never paid $1 out of their pocket while the bank was paying their taxes for them. They should be brought up on charges.

I agree with Mark's comments, though in my neighboorhood, there are speculators that bought these places, never made 1 payment on their mortgage or their HOA fees then when the bank forecloses on them, they steal everything inside. In my opinion this is theft. They never paid $1 out of their pocket while the bank was paying their taxes for them. They should be brought up on charges.

In my neighborhood, friends and neighbors became speculators, when it became so easy to get a loan. They're no longer telling me about how they used their HELOCs to buy condos.

All we have to do for this market is NOTHING. You heard me nothing, just let the market correct itself.

I thought the idea of a tax break was a great idea. Originally though it was $15,000, then reduced to $7500. At $15,000, I thought that could be enough of an incentive for someone to get off the fence and purchase - heck that's the down payment for many people. $7500 won't have the same effect.

Tax breaks are a better way and cheaper way to jump start the economy, than blank stimulus checks to states.

"Is it irresponsible to walk away from a home that's worth less than the mortgage?"

Yes but... I know a couple of people that have had to move, can't sell the house and the bank totally refuses to work with them.

I think the proper answer is to handle them the same exact way IRS is handling short sales. You had a debt of x dollars forgiven and should be taxed as income for it.

If you knew IRS was going to add $300,000 to your income in one year, you might think twice. Hey people buy new cars, finance them and lose half their money driving out of the parking lot. No one was ever promised a house couldn't do the same thing.

Yes, there was no promise that every house would go up in value by the max amount in the boom years. But there are tremendous tax incentives to own a house. Not just the mortgage interest deduction. Now, if you are forgiven some mortgage debt, you don't have to count that as income and pay tax on it, at least temporarily and under certain circumstances. The housing lobby has done very well by its customers.