Walking away from that Option ARM

Over at Calculated Risk there's a post about the impending Option ARM crisis.

The good news, according to a Barclays Capital report, is not as many Option ARMs will recast in 2011 as forecast earlier by Credit Suisse.

The bad news is borrowers are defaulting en masse before the recast.

Of course they are. These stupid loans are washing out long before they are due to re-set. As I pointed out last year, why continue paying on a $400k mortgage when the underlying asset is only worth $200k? I consider myself an ethical person, but if I was in that situation I'd bail.