YouWalkAway.com developed a strategic default calculator that was featured on a New York Times blog post and helps homeowners calculate the savings they would have by getting out of an underwater mortgage.

This made banks who could have been holding underwater mortgages very happy.

So along comes the natural response: strategic defaults, borrowers walking away from underwater mortgages.

Frank wants the banks to write down the value of their second loans, so it would be easier for homeowners to renegotiate their underwater first mortgages, obtaining significant reductions in principal.

Bailing out the banks that hold all those underwater mortgages essentially amounts to the government assuming (hopefully) temporary ownership of the underlying assets.

James Surowiecki, in his essay about bankruptcy, contrasts homeowners who continue to pay underwater mortgages with businesses that strategically default on their debt (The Financial Page, December 19th & 26th).

This situation is colloquially known as "underwater mortgage".

Household defaults, underwater mortgages (where the loan balance exceeds the house value), foreclosures, and fire sales are now endemic to a number of economies.

The Atlanta market is under pressure from a high percentage of distressed mortgages, deeply discounted foreclosed properties, low property values, and many severely underwater mortgages.

HARP is designed to assist homeowners refinance their underwater mortgage(s).