Stop Paying Mortgage Payments?

Stefan Karlsson, an economist in Sweden, has a blog focused on hard-hitting economics commentary.  In a recent post, he opined as to whether or not the current government bailout will cause people to stop paying their mortgages.  The bailout provides incentives for the government to do everything in their power to ensure people do not lose their homes to foreclosure, including offering better terms and payment options.

His thoughts were in reference to a recent interview with Peter Schiff, author of "Crash Proof" and CEO of Euro Pacific Capital (emphasis my own):

 "If you haven't already listened to it, do listen to the LRC podcast where Lew Rockwell interviews Peter Schiff. As usual with Peter Schiff, he provides a lot of valuable insight, but what I actually found most interesting is how he reveals that with the bailout package, it is economically rational to stop paying off your mortgage. Because if you do, your lender will sell the mortgage to the government who under the package must do everything they can to prevent foreclosure, which will mean that they will have to offer you a sweeter deal. So when Rockwell asked Schiff what an ordinary person can do to save themselves in the ongoing economic meltdown Schiff replied that the most obvious and best thing to do is stop paying your mortgage. I spontaneously laughed when I heard that as I figured he was only ridiculing the irrationality of the bailout plan. But maybe Schiff is right, maybe it would be rational (at least for some people) to stop paying your mortgage with this bailout plan. Can anyone find any reason why Schiff is wrong on that?"

What do people think of this rationale?  I find it crazy that the government has put themselves in a position where it could even be remotely possible for people to take advantage of such a situation.