Reply #7: Correct, the "moral hazard" is the temptation to serve your own interests [View All]

[bemildred]

rather than the bank's. The central point is that the property is not worth what is owed on it, and that the debt is secured by the property. The notion that one has some moral obligation to the bank to pay for it anyway is absurd. The bank assumes no moral obligation towards you, it does what the law allows and prudence dictates to maximize its own profits. You should do the same.