Walking Away From Your Mortgage: 3 Reasons It's a Bad Idea

If all the stories in recent months about walking away from your mortgage are to be believed, the practice of not paying this once-sacred obligation has become, if not quite acceptable, then at least understandable. Whether a person is underwater on his or her mortgage, is unemployed, or both, when you listen to the reasons why they decide to give the house to the bank, it actually starts to make sense.

But the costs aren't always apparent.

If you paid $250,000 at the top of the market three years ago, with a 5 percent down payment on a home that is now worth $150,000, why would you continue paying a mortgage that is more than the home is worth? Why not walk away, find a nice rental, and wait out the downturn while you do everything you can to repair your credit rating?

"We've seen an increase in the number of people contacting us about it," said Jon Maddux, CEO of YouWalkAway.com. His company, for a fee, counsels people on how to implement a strategic default (a voluntarily walk-away) from their mortgage. "People have tried other options -- whether it was a loan modification, a short sale -- and it didn't work. This is the next phase."

Still, says Maddox, "We know it's not for everyone. We prefer they try other options if they can before simply walking away. There's more strategy to it than just not paying the mortgage and waiting for the bank to foreclose."

Indeed, there are several reasons, say experts, to continue paying your mortgage. The consequences, they say, can go beyond the ignominy of not honoring your obligations and the hit to your wallet.