By the way a bill removing the tax on forgiven debt passed in the House 386-27. Bush wanted the relief temporarily. Democrats went even further and made it permanent. Isn't that great? Remove those inhibition for gambling. Everybody should gamble away without fear. It's a free country after all.

However, I take issue with one statement: "They were gambling that the house prices would continue going up 15%, 20% a year. If they won, they'd profit handsomely."

There is no "profit" per se here because all houses have gone up. The only gain made is buyers that "get in" in an escalating market establish a basis. To move up there has to be either an extra contribution from the buyer or an increase in the risk assumed or a drop in the interest rate. And usually you need 2 of the 3 after selling and buying costs are included.

Also, I'm pretty sure that banks do go after buyers that walk away from houses. Thankfully I don't have experience here, but my understanding is that it usually takes a couple years for the bank to start collection. Also, it is my understanding that any forgiven debt is required to reported as income and taxes are due.

Aside from the mental pain of foreclosure there is some financial suffering as well. Perhaps not enough, however, to keep this from happening again.