We Could Have Fixed the Underwater Mortgage Crisis a Long Time Ago

Bob Stachler's life started to fall apart when his ex-wife passed away. When they divorced, she had kept the family home, and Stachler decided to buy it after her death to give his three teenage children some stability. The house on the suburban edge of Chicago's South Side was beyond what Stachler, a truck driver, could really afford as a single dad. But it was 2007, and getting a mortgage was easy. "I was thinking, I can do this. I'll keep my children in the house they grew up in," he says. Then, in 2009, Stachler lost his job. He started to default on his $1,785 monthly mortgage payments. "I thought I was destined to lose the house," he says.

Five years after the housing bubble burst, 10 million homeowners are struggling to make payments on "underwater" mortgages. Selling their homes won't free people like Stachler from their debt burden, because they owe more on their mortgages than the current market value of their houses. But many such borrowers could afford a mortgage that reflects the current price of their property—often much lower than the inflated price appraisers quoted at the height of the housing bubble.