In Memphis, 25.34% or 54,742 of all residential properties with a mortgage were in negative equity as of September, says Mark Fleming, chief economist with First American CoreLogic. In other words, 1 in 4 homeowners owes more to the bank than his home is worth.

"Negative equity continues to be pervasive and to impact almost every segment of the housing market," Fleming says. "The recent improvement in home prices this past spring and summer has slowed the increase in negative equity, but it will take a significant rebound in home prices, which we are not expecting, to offset the dampening effects of negative equity in the most depressed states."

Meanwhile, Tennessee ranks No. 2 in average credit card debt per borrower ($7,039). Alaska ranks No. 1 with $7,699 per borrower and the national average is $5,612. So homeowners are struggling with their mortgages and carrying too much debt.

But more alarming is that for the first time in 10 years, third-quarter credit card delinquency rates declined from the previous quarter, according to credit and information management firm TransUnion.com.

The delinquency rate -- the ratio of borrowers 90 days or more delinquent on one or more of their credit cards -- dropped to 1.10% in the third quarter, down 5.98 percent over the previous quarter.

That drop in delinquencies runs counter to the typical seasonal pattern: Delinquency rates usually rise in the third quarter from the prior period when consumers usually increase their debt burden to pay for summer vacations.

Coupled with the more than 11 percent decline in delinquencies between the first and second quarters, the trend indicates that consumers are changing their attitudes toward debt.

"This recession has taught the U.S. consumer many lessons: Shop around for the best deal, maximize the value of your spending and protect your day-to-day liquidity," says Ezra Becker, director of consulting and strategy in TransUnion's financial services group.

So while the consensus is that the Great Recession is over, the Great Deleveraging is still raging.

But consumers are making disconcerting choices about deleveraging their balance sheets: While not paying their mortgages, they are paying their credit card bills.

This is runs counter to the age-old adage that people will pay their mortgage first and everything else second.

Some observers attribute this change in consumer behavior to the unintended consequences of massive government intervention, namely "moral hazard."

Moral hazard happens when the government promises to bail out organizations or individuals if their behavior results in financial ruin.

In other words, there is no incentive to play it safe if you know you will get bailed out by Uncle Sam.

So if homeowners believe the government will bail them out of underwater mortgages, they'll just stop making payments and wait for the federal rescue.

Since such a bailout isn't available for credit card debt, they continue paying those bills.

As is usually the case, unintended consequences spawn more unintended consequences. And the implications are serious.

As homeowners with negative equity default on their mortgage, foreclosures will increase and housing prices will come under even more pressure, causing even more homeowners to go under water.

As foreclosures increase and more homeowners sink under water, federal bailouts will continue to mount, threatening the viability of the Federal Housing Authority, Fannie Mae and Freddie Mac -- which back 96 percent of all mortgages.

Finally, the economic recovery faces extraordinary obstacles if consumer spending depends on not paying the mortgage.