Prudent we are not!!!

As responsible & fiscally sound as we think we are, we find ourselves often in situations where in all our wits, prudence and wisdom are washed out by the decisions we are forced to take due to the overbearing situations that have caught up with us. In today’s environment, the first thing people relate to is the pressure of mortgage payments, we don’t want our houses to go away. Maybe the decision to take the house was not bad, which cost more than one could afford, but the 2 year arm mortgage, made the payments low and it seemed that this was the best investment. Whereas no one knew that 2 years down the line, the property market would crash, credit would tighten and monthly payments would increase more than 15%, as the rate of interest would suddenly rise from 6.5% to 8.5% or more. Now, no refinance is possible, as the equity has suddenly vanished (even the down payment one had put while buying the house), income is not high enough to the stringent standards of today and of course, credit is not 800. What one must do???