I wrote this as a comment on a post on defaulted mortgages, and I deemed my thoughts worth posting on their own.
There is a difference between strategic defaults and true distress. Buy and bail strategic defaults, in other words, people who move from their $300,000 home to an identical one for $180k, say they are renting out their old home and then just mail the keys back to the lender, are not the same people stripping the copper pipes in disgust in my experience.
I speak with people facing foreclosure and short sales daily. It is a big chunk of my business.
Many of the people who are in default were promised they could refinance out of an option ARM or exotic loan they were sold by loan officers who are all too often in another industry now.
Many are honest folks who called their lender earnestly asking for a refinance or loan modification and were told they had to default to get their loan mod...and after a year of red tape hell, outright lies and complete indifference by the merry go round of bank grunts, they face losing their homes.
You also have legions of people who lost their jobs and have scratched and clawed back to employment who can resume payment but can't write a fat check for their arrears.
There is no simple mechanism to help these people. All we have is bank fiat, government lip service, and snark from people pointing their bony fingers at a contract which is probably in a shredder or storage facility in India.
That's not the blueprint for recovery.