Back on topic, All this foreclosure/bailout stuff is pretty arbitrary. It will be all the more so if it keeps happening. That in itself seems like a accelerator of morale hazard. In this case, does someone get to keep their job if they got a kick the can down the road loan mod on their liar loan?

The policy Ricechex described also seems like it could be an tactic to control strategic defaults. Something short of debtors prison but serious and maybe unconstitutional?