Who Walks Away From a Mortgage? Not Whom You'd Expect

Peter Safronoff drives a Hyundai and lives in a rental bungalow in Encinitas, Calif., a beach community north of San Diego. At 63, it's not the golden-years lifestyle the financial consultant planned on, but it's the one he has.

"I live in a beautiful place, in more modest circumstances," he says, "but at least I know I won't go bankrupt now."

That's because last November, Safronoff walked away from his 1,600-square-foot home near San Diego, which he bought for $400,000 in 2005 with a 10% down payment. Like so many American homeowners, he lost his job in the financial crisis and watched the value of his house plunge. Unable to modify his loan -- and unwilling to push himself into complete financial ruin to keep his condo -- he made a strategic decision to pack his bags and leave the keys for the bank.

Homeowners like Safronoff keep the lending industry awake at night.