The math makes it reasonable for me to walk away from my home. I won’t do that because, aside from wrecking my credit, I’m an honorable person. I signed the contract voluntarily, however stupidly short-sighted I was. That’s not the mortgage holder’s fault.

That said, if I had trouble paying, I would absolutely call the bank and threaten to walk. Incentives matter. I don’t want to wreck my credit, but like you wrote, the bank doesn’t want to own my house or pay for its upkeep until it can lose more money on the deal. Reality changes make both parties more willing to talk and renegotiate.

Of course, if the bank said “no, thanks”, there’s no legitimate reason for the government to step in and compel the bank to choose otherwise.

* I can’t say the same for my property taxes. With falling values come the matching jump in rates to overcome the decreased revenue. I’m sure the tax rates will fall whenever home values increase.