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Q. Many public figures are urging people to pay their mortgages even if they are “underwater.” What does Judaism say about this?
A. Housing prices always have cyclical ups and downs. But once upon a time, mortgages were only given with a hefty down payment, usually at least 20%. The only way the mortgage could be worth more than the house is if housing prices went down at least 20%, and relatively soon after the house was bought. But in recent years more and more mortgages were given with low down payments, and the crash in real estate prices was unusually severe. The result is that currently there are millions of Americans whose houses are “underwater,” meaning that they owe the mortgage lender more than their house is worth.
If the house is the only collateral on the loan, this makes it financially attractive to default on the loan and
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