Why? The government will bail them out.

As long as lots of people get crushed simultaneously, the banks will demand to be bailed out, too.

A bunch of Southern California homes are already in this state--the banks are allowing the "owners" to simply pay the tax and interest and still live there. Why? Because if they foreclose on just a few too many houses, the basis value will plunge, the "owners" will walk away, and the bank will be stuck with a house they can't sell which will promptly get vandalized.

Only suckers use cash as long as the government keeps bailing them out.