Are Strategic Defaults the Housing Crisis' Culprit?

MAKING SENSE -- April 4, 2012 at 12:37 PM EDT

Are Strategic Defaults the Housing Crisis' Culprit?

Infographic: What would you do if you can't pay your mortgage? Creative commons image courtesy of flickr user truliavisuals.

Paul Solman frequently answers questions from the NewsHour audience on business and economic news on his Making Sen$e page. Here is Wednesday's query:

Name: Tuba Gokcek

Question: Strategic defaults are a big problem in California and many other states. They are the main reason the housing crisis keeps getting worse and more and more homeowners lose their equity. We have started a new advocacy group to stop them: www.StopStrategicDefaults.com. Please spread the word to help end this ugly epidemic. What is happening to America?

Paul Solman: Strategic defaults are the "main reason the housing crisis keeps getting worse?" You really think so? Not un- and underemployment that's still above 14 percent, according to our U-7 monthly reckoning? Not foreclosures that glut the housing market? Not the failure of the government or banks to renegotiate the terms of underwater mortgages?

As for strategic default on real estate commitments, its defenders point out that businesses do it regularly. See our story from last year on the two sides of the strategic default debate: Strategic Default: Right or Wrong?

This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions.

Follow @paulsolman

Beginning October 24, 2012, PBS NewsHour will allow open commenting for all registered users. We hope that the elimination of our moderation process will enable a more organic discussion amongst you, our audience. However, if a commenter violates our terms of use or abuses the commenting forum, their comment will be removed. We reserve the right to remove posts that do not follow these basic guidelines: comments must be relevant to the topic of the post; may not include profanity, personal attacks or hate speech; may not promote a business or raise money; may not be spam. Anything you post should be your own work. The PBS NewsHour reserves the right to read on the air and/or publish on its website or in any medium now known or unknown the comments or emails that we receive. By submitting comments, you agree to the PBS Terms of Use and Privacy Policy, which include more details.