Why Homeowners 'Walk Away' From Their Mortgages

Consequences of Defaults

Choice or not, walking away from a mortgage payment can have serious consequences. There's the loss of the house and a bad credit rating. And depending on the state, lenders can target delinquent homeowners by going after back payments if the law allows.

Homeowners could also owe back taxes on a forgiven debt. And if homeowners have a second mortgage, they might be liable for all of those payments if they've stopped.

But those threats aren't enough to keep some people paying. "I'll get a clean credit rating eventually," says Bryant who admits he has 'fairly large' retirement portfolio. "I'm planning to build another home and by that time I should be fine."

As the numbers of walk aways climb, so do the forces creating them. It's estimated that 4.5 million homeowners owed more on their loans than the house was worth by the end of 2009. That number is expected to climb to 5 million in 2010 along with the number of foreclosures—which some estimates put at 4 million by the end of this year.

Dire predictions aside, the housing market is stumbling along and their are some signs of improvement. Home prices in Southern California, one of the hardest areas hit in the housing bust, rose 8.6 percent in January of this year, compared to the same time in 2009. And some parts of the country are actually seeing a decline in foreclosures, at least for now.

Housing Conditions Creating Walk Aways?

For those skipping out on their mortgage payments, Bankrate's McBride says they should honor the contract they signed. "Sure home values go down, but homeowners made a deal," says McBride. "You don't see new cars left abandoned on the road side after they leave the dealer and their value is less."

But unless the economy improves, and specifically more people find work, it's going to be hard to see housing get even close to where it once was—and more strategic defaults might be on the way.

"I think it's going to take a long time for housing to see some daylight," says Johnny Martinelli, a broker and owner of Levy Mart Real Estate in Norman, Oklahoma. "I see interest rates going up soon and with a bad job picture, I think it will be years before home prices come back."

For those who can't wait years for a housing recovery, not paying the mortgage seems like the only option. But having to vacate a house that was once a home leaves a range of emotions.

"I felt hurt and anger and had lots of sleepless nights," says Protich who had never missed a payment before. "I kept thinking about my neighbors and how nice they were. I feel relieved I don't have to pay the mortgage but I'm so disappointed that I got no help. I really didn't want to do this."

Slideshows:

• Best Places to Buy a Foreclosed Home
• Cities With The Most Underwater Mortgages