IntroductionIn 2010, more than 1.05 million homes were foreclosed in the United States, compared to 918,000 in 2009. An estimated 26 percent of these homes were strategically foreclosed in default by owners who were unable to do so. “upside down” on their home equity. Is the decision to strategically default ethically sound? It is estimated that in 2009, foreclosures cost communities $502 billion and that homes located near foreclosed homes lost an average of $7,200 in value (Center for Reasonable Lending, 2009).Clarifying ConceptsStrategic default is non-payment of a mortgage. obligation of a homeowner who is “underwater” in their mortgage contract and who has other significant credit obligations on which they continue to pay (Tirupattur, Chang & Egan, 2010). A homeowner is considered “underwater” when the mortgage obligation on their property is greater than the current market value of the property. A strategic default ultimately results in foreclosure, which is the legal process by which an owner's rights to the property end. A housing bubble is defined as a rapid increase in home values ​​that is unsustainable relative to incomes and the economy. Identify possible solutions to the problem. The mortgage lienholder or lender could proactively offer mortgage bond modification to homeowners in areas most affected by housing decline. real estate market and economic recession. States like California, Florida, and Nevada have seen property values ​​decline as much as 65% over the past four years. Modifying mortgage bonds is the solution suggested by the United States Department of the Treasury, which believes this course of action would end the mortgage...... middle of paper ......ton College of Law, American University, Washington, DCGuiso, L., Sapienza, P., and Zingales, L. (2009). Moral and social constraints to strategic default on mortgage loans. Manuscript submitted for publication, European University Institute, Northwestern University and University of Chicago, Chicago, Illinois.Leipziger, DA (1976). The mortgagee's remedies in the event of waste. California Law Review, 64(2). Levitin, A. (2009). Solving the foreclosure crisis: modification of mortgages in the event of bankruptcy. Manuscript submitted for publication, Georgetown University Law Center, Washington, DC Tirupattur, V., Chang, O. and Egan, J. (2010). Understand strategic flaws. Morgan Stanley Research. New York, New York. White, B.T. (2010). The morality of strategic default. Manuscript submitted for publication, Arizona Legal Studies, University of Arizona, Tucson, Arizona.