Fraud is an interesting aspect of this whole drama.

A lot of borrowers obtained loans through fraud (overstating income, primary residence instead of investment purchase, etc..) If the banks do some research and can uncover fraud then all bets are off. I would think that the non-recourse aspects of the mortgages are voidable because of fraud (which is also a criminal offense punishable by jail time, if the DA decides to prosecute).

Personally, I think we (as a society) should put more resources to prosecuting the white collar criminals. It doesn’t seem fair that the uneducated criminals get stiff sentences while the smart people who cook up complex scheme go unscathed.