> So, about this housing bubble: Let's say I default on a mortgage and
> the bank takes the property, and after they sell the property, they
> only get half of what I owe them. What happens to the other half of the
> debt?
It depends. Technically, you still owe it, so the bank can go after your other assets to collect. In reality, if you default you will probably file for Chapter 7 bankruptcy, in which case your asset (the house) will be liquidated to pay off the debt, and the creditor basically must take whatever can be salvaged. If you cannot file Chapter 7 (e.g. you filed for it less than 7 - or is it 10? - years ago, you probably end up owing the reminder to the creditor, but if you do not have any other assets, not much will happen, since there are no debtor prisons in the US. The creditor can probably garnish your wages - if you have any - but that can be difficult and costly.
So I guess the creditor's decision to go after you depends on the amount owed and the probability of collecting non-trivial parts of it. So, say, you default on a $100k row house with little or no equity house in a not so good neighborhood and are between jobs for some time. The creditor sells it for $70k - and you still owe $30k. The chances are it will probably be written off (or sold to a collection agency), because the chances of collecting that money are not that great. But if you default on a $1M mansion which is re-sold for half of its value and you are a successful business person - the chances are you will hear from your creditor's attorney. Of course, the second example is not very realistic, because if you are a successful business person who can afford a $1M mansion, you will have other options before defaulting - unless you are defaulting for strategic reasons (e.g. anticipating a nasty divorce).
Wojtek