Mike, that's a HUGE misconception. Assuming you declare bankruptcy after (or during) the foreclosure process, you can get a really decent mortgage again in about 2 years. Re-establishing credit is easier than ever before, and banks are going to have to be more lenient about credit history in light of the huge number of people in just this situation.

You're right, though -- if they don't declare bankruptcy, they'll be legally haunted for 7-10 years, and a foreclosure can resurface over and over, for 20 years or more, even though it's technically illegal.

Huh? How does a foreclosure-stricken buyer get back into the market in 2 years? The foreclosure will be on their credit record for either 7 or 10 years, I can't remember. Unless they can come up with $300k cash in 2 years, they'll have to wait until the foreclosure is wiped off their record before getting another mortgage.