It’s no secret they are on the rise and for obvious reasons. First; negative equity! The second reason is President Obama’s soon-to-be-announced plan to encourage principal reduction. If the plan is structured so that it gives incentives to default in order to secure principal forgiveness, which it will, expect defaults to spike. This does not mean mailing your keys to the bank and walking away. It may simply mean a borrower choosing to stop payments to the bank when economic incentives would have him do so. Its a no brainer to me!