There is nothing at all wrong with having "negative equity" on a mortgaged home PROVIDED you are able to pay, and keep paying, the mortgage payments and provided you are not wanting to move house.
Negative equity only becomes a problem when you want to move or when you can not afford the repayments.

Now, having said that, where does the responsibility lie for the rise in negaitive equity problems? A case can be made for both the bank/building society and the householder sharing that responsibility.