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The Moral Hazard argument regarding mortgage foreclosure

The moral hazard argument has been the standard line from the banks and the government regarding mortgage relief and principal write downs for home owners.  The theory is that there would be too much out cry from the general public if certain people received more help with their mortgage.  There are people who would be upset about this of course.  However, it appears that we all may suffer longer if something isn't done to eliminate the rapid increase in  underwater mortgages.