Buy a smaller house, Ray. One you can afford next time.
Or better yet...rent. Not everyone "deserves" a house and it sounds like his asset allocation is so poor that he is not financially prepared for home ownership.
You can't be serious? Why, when the bailout comes and the fed buys his mortgage (or takes over his Fannie or Freddie loan), the government will negotiate the mortgage by discounting the principal and lowering the interest. Then Ray will be eating Ruby Tuesday hamburgers and schleps like you and me will be working our butt's off repaying our mortgage and subsidizing good ol Ray's!!!!!
Easy to say, but a lot of people bought houses they could afford at the time but things have changed. They lost jobs, or lost income at a job the relied heavily on commission, bonuses, or overtime.
In my case, I got divorced and stuck with the house...
The house is now worth about 20% less than it was four or five years ago.
If I sell now, I lose a huge amount of my savings that I had sunk into the down payment. However, I can't rent the place for as much as I'm paying in my mortgage, fees and taxes despite having put down 20% when I bought the place.
I didn't really have a choice, so I recently started renting the place. I'm losing a couple hundred dollars every month, plus whatever it will cost to fix the place up to salable condition when I'm done renting it out. I'm now renting out my brother's basement. Not how I'd planned on ending up at 40 after being reasonable with my finances and not overextending myself, but I'll be back in reasonable shape once the housing market recovers. It may be a few financially tight years between now and then, but there are no guarantees that life will always just keep getting better and better without any setbacks along the way.