The FastTrack to Freedom program allows these families a chance to keep their existing home, immediately re-establish positive equity (90% LTV), and lower their monthly payments.

I don’t see a lot of comments on this thread, but I think there *is* a moral obligation to do your best to honor a debt. But, when a home is hundreds of thousands of dollars underwater, or when it will take a family 5 to 10 years to get back to positive equity, it is difficult to ask a family to cause that much harm to the children and their own retirement in order to “do the right thing.”

In these situations, I believe the moral obligation is for both borrower and lender to work together to find a mutually agreeable solution. I think the borrower has a string moral obligation to give the bank a chance to “do the right thing” too.

In the situations where the bank refuses to negotiate in good faith, I believe it terminates any moral obligation on the part of the borrower. At that point, anything allowed by law should be considered, and the family should focus on what is in their best interest.

It may be counter-intuitive at first, but this is actually best for all of society. There is an interesting article on wikipedia about “efficient breach” that explores this concept in detail.