underwater mortgage

It's not just the laid-off industrial worker or the owner of the rundown shanty that's tumbling toward foreclosure or struggling to stay current on their home mortgage. Contrary to common stereotypes, the current housing crisis is plaguing the so-called rich harder than the common man.

One in seven homes with loans of $1 million or more are "seriously delinquent," which is defined as missing three payments in a row; that's according to data compiled by the real estate analytics company CoreLogic for The New York Times.

In fact, owners of high-rolling loans have ceased paying their mortgages at a rate higher than the rest of the population. These borrowers -- in upper-crust havens like Los Altos and Orinda, Calif. to Wilmette, Ill.-- are faring worse than those with loans under a million dollars, where about one in 12 mortgages are underwater.

So, why are the rich the biggest defaulters?

It's as good as official: Home Affordable Modification Program, the year-old government program to save homeowners from foreclosure, is a flop.

Today, the Obama administration is set to announce new aid for many homeowners in trouble, who have been beyond help under the limited rules of the old HAMP program.

Using $14 billion more from Troubled Asset Relief Program, or TARP, Treasury for the first time will support reductions of principal that borrowers owe – a crucial step in bringing underwater borrowers back into financial stability. (Ironically, Bank of America beat them to it with a principal reduction program it announced yesterday).

And there's even bigger news in store. The administration may also allow some borrowers who owe more on their mortgages than their homes are worth to refinance into new, smaller mortgages that are based on their actual home values through the Federal Housing Administration.

Big real estate developers do it all the time - like yesterday, when the owner of New York City's Stuyvesant Town complex decided to stop paying its $3 billion mortgage. So why are you still writing a check every month on that mortgage that's much bigger than your home is actually worth?

Good question, University of Chicago economist Richard Thaler says. Thaler tells New York Times readers that it's not just alright to walk away from one's over-sized mortgage -- it may actually be a moral imperative. (An earlier Times article, by Roger Lowenstein, said much the same thing.) After all, lenders had no second thoughts about lending more than many borrowers could afford or than the homes might actually be worth. It's just not fair to expect borrowers to follow rules that the lenders don't.

But why stop there? Some commentators are now calling on borrowers to start a mass mortgage strike.