For starters, the Yanks don’t have the term “negative equity”. I tried to tell them by commenting on this CNN story, but it seems CNN is another site where they get you to write a comment and nothing happens. I won’t bother in future.
But this NYT story is breath-taking. It seems the US is the land of the free, yes sirree, you’re free to walk away from your mortgage if it turns “upside-down”! Unbelievable. I hope they realise that no-one (stupid foreigners) is ever going to lend them (the US) money to buy houses ever again. And they’ll probably be very careful what else they lend it for. Talk about moral hazard, eh, Merv?
Uncharted Territory 
Wayull, sorta. US mortgage law is set State by State, so it’s difficult to say that it’s one way or the other.
But in general, on average, primary mortgages are non-recourse. The lender has the security but not a general charge against the borrower.
Second mortgages, equity release etc, they (again, generally) do.
Paul Krugman’s done at least one column on it: “Jingle Mail” is the phrase I think, just sending the keys back to hte mortgage house in hte mail.
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