That's definitely an option if your house is in a non-recourse state (which is barely a third of them from what I can tell). If your house in one of the other 3

That's definitely an option if your house is in a non-recourse state (which is barely a third of them from what I can tell). If your house in one of the other 33 states and you walk away from an underwater mortgage, the lender can make you pay whatever is left-over on the mortgage after they get the proceeds from the foreclosure sale. That is a tough pill to swallow, because not only do you lose your house, you have to keep paying a big chunk of your mortgage with nothing to show for it, and because a foreclosure auction is not the most favorable way of selling a house, you might end up even worse off than if you did a short sale.