I was up there a couple of months ago and it is just has a bleak and empty aura about it that is like no other city I've ever been in.  It has almost a post-apocalyptic feel.  There is far less appearance of human activity per unit of structure than any place else i've been, and granted I was there during cold weather, but still, there weren't even very many cars driving around on the surface streets. 

And that was just mostly downtown and the main thouroughfares.  I didn't seek out what the "real" Detroit looks like off the beaten path. 

I just checked on realtor.com and a third of the listings are under $10k.  Just looking at what's for sale @ $10k, most of them look like there's nothing wrong with them, a lot of them look just like the postwar houses in the neighborhood where I bought my first house here in Columbus.  That was nearly 20 years ago and I paid $41k for the most neglected house on my street, in a neighborhood that was strictly no frills.  But with no schools and no jobs, who can really live there?  There will probably just be more and more people moving out, and these houses will just be abandoned and rot. 

Three hours from where I sit right now, amazing.  I mean it's not like Columbus is thriving or anything, but that's got to be a whole other world up there to have 2,326 houses $10k and under listed in the MLS.

Maybe I should just do my bracket, because it bothers me to really even think about it, and I consider myself to be pretty hardened to this kind of stuff, not that that's anything to be proud of. 

Kwame Kenyatta, a city councilman and newly announced mayoral candidate, and his wife have handed the bank the keys to their North Rosedale Park house and walked away from the mortgage.

...

"Everyone kept saying 'We don't have a program for you,' " said Kenyatta, who makes $81,312 a year as a councilman and gets free use of a Ford Crown Victoria. Standing outside the house Monday night, he pointed to house after house on the block on Bretton that also have been lost to the bank.

Kenyatta and his wife walked away from a monthly tax, insurance and mortgage payment of $2,600, one year before the interest would jump to 11.625 percent from 6.625 percent and the payment would hit $3,600. Kenyatta said that even though his monthly payment has remained the same for years, he felt it made no sense to remain in a house whose value had plummeted to $100,000.

www.detnews.com/apps/pbcs.dll/article

On the one hand, you don't like to see people walking away from their mortgage when they could continue to make the payments with their income.  On the other hand, just looking at the situation from a perspective of self-interest, who can argue with the actions of Mr. Kenyatta?  It's a good deal for him.  He 1.) doesn't have to go thru bankruptcy, 2.) can get rid of a house he is more than $100k underwater on, and 3.) can turn right around and lease a house that is probably even nicer than the one he left, since he has a good income.  Where's the downside, except a hit to his credit and maybe for his political career if his opponents in the mayoral race can make this into a responsibility issue?

This confirms what my real-estate-agent brother told me when we were talking about the various housing proposals.  He said that people do not want to stay in their homes.  They want to mail the keys back to the bank and are more than willing to take the hit to their credit.  And the law in many states, including Michigan, allows people to do this and the lender can't pursue the former homeowner from the loss.  And the government has already passed a law that has eliminated the "forgiveness of debt" tax that these folks would have owed in the past in most cases if they had just mailed the keys back to the bank and the bank had to take a loss. 

It looks like people already have a good option in all the non-recourse states, and they are more than willing to take advantage of it-- even when they can make their payment.  Mr. Kenyatta is going intoo foreclosure, but he will not be homeless-- in fact he is upgrading by all appearances!  It's the bank that's going to take the big hit.