I'm torn on this issue. Having been in/from the mortgage industry, it's a two edged sword. If you default (walk away) you should consider bankrupcty, and get it all over with. Credit cards, vehicles and whatever else you want to walk away from. The upside is it gives you a fresh start, the down side is it will ruin your credit for about three years...not seven. Federal law makes the purchase of a new home available in three years after a mortgage default, two years after a bankruptcy...if...your income qualifies you. Really, it's not that bad. Just rent for three years. Better yet, find some schmoe that's NEEDS to get out of his house and make a purchase contract with him/her. By producing a purchase contract of the mortgaged home (the mortgage is still in his/her name) you're in the drivers seat, and in most cases, the homeowner will just let you "take over payments". Now that you're the legal owner of home, making payments directly to his/her bank, you qualify for a "refi" after just twelve months making payments.
Yes, you heard it right, a little known secret in the world of finance. However, if you have defaulted on a previous mortgage within the previous three years this "refi" will not work. But...you can still "take over payments" until the three years passes. Then...refi it into your name. You may even be able to negotiate with bank on a short sale price from the previous owner since the home is no longer worth what it was, thereby giving you huge break.
Back to the article, I DO feel that, as in the instance of the lady in the article, the home is worth significantly less what is owed, walking away should be considered. If you bought a home for $500K and it's worth $200K, how will it take to get back $500K? Maybe never! However, this mindset leads to other things. If you buy a new Cadillac SUV, you could argue that one year later it's worth only about 60% of what you paid for it, should you return it to the lender? In most cases, you keep the car and make the payments even though it's not worth anywhere near what you paid for it (or what the bank is holding the note for).
You could reason the same way on Credit Cards. "Gee, I bought that new couch two years ago, and look at it, it looks horrible. But...hmmm...I still owe the Credit Card company $1,500.00 on it, should I default on the Credit Card because the couch is such bad shape and it's no longer worth what I paid for it?" Do you see where this goes, it's endless. You could just default on everything, you might as well. If you default on one thing, you might as well on all the things you don't want to pay for, the result on your credit report will be the same.
The difference with the credit cards, is that a credit card is considered "unsecured debt". So...buy a car on a credit card and then default? Guess what? You may get hounded from the CC company but the car was bought on the CC and therefore considered unsecured debt, you get to keep it, just like the couch they wouldn't take from you. However, the CC co. may take you to court to get a judgement against for the amount owed. If that happens, you're back to step one, bankruptcy. But...in a bankruptcy....YOU get to dictate the value of car...within reason.
I could go on for hours, but alas, my fingers wouldn't take it. I'll be happy to answer anyone's questions.
