A problem with financially strapped homeowners with falling home values is that they have their eye set on the problem. Making more money is the obvious solutions, but it's not often possible. Here's one they may not have thought of. The market is flooded with renters right now. Of course many have bad credit because they've been foreclosed on. However, it is a landlord's market. Scenario: A family has a 3 bd/ 2.5 ba home that could rent for $2500 in California. Their mortgage payment is $3000. It wouldn't be the obvious answer to rent the house out. Solution: Rent the house out for $2500. This family then needs to go rent a smaller place, maybe a condo or townhome for $1500. On their mortgage payment, they owe $500 more than their rental income. Add that to the $1500 they are paying in rent and their total new out-of-pocket expense is $2000. Even though they owe more than they bring in on their mortgage, their cash flow just increased by $500. They'll be more cramped in a smaller place. However, if that eases their burden enough to make ends meet, they just saved their home from foreclosure. Eventually, when the market comes back or their income goes up, they can sell or move back in unscathed. I'm sure I'm not the only one thinking this way. However, I know fear and panic can blind a person from seeing their options.