The first hurdle is to determine whether you live in a state that allows lenders to pursue you for a deficiency judgment. A deficiency judgment means a lender can go after your other assets if the company forecloses on the property and resells it for less than you owe on the mortgage.
So if you owe the lender $400,000, and the lender forecloses and resells the property for $200,000, the lender could come after your other assets to pay up the missing $200,000.
But many states do not allow deficiency judgments. In those states, the lender agrees to accept title to the property if you can't pay and does not try to attach liens to other assets.
If you live in a state that doesn't allow deficiency judgments, it paves the way for you to simply mail the keys back to the lender, if you're able to let go of the emotional attachment you have to the property.
According to a spokeswoman for First American CoreLogic, a homeowner's emotional attachment to the property fades as the home loses value. Once a house is worth less than 75 percent of the mortgage amount, the homeowner's emotional attachment disappears.
That could spell trouble for lenders that are expecting as many as 7 million additional foreclosures by the end of 2011. While some of the expected 5.1 million homeowners who will own homes worth less than 75 percent of the mortgage amount are included in that number, plenty are not.
Lenders expect that if you haven't lost your job or experienced some other sort of financial hardship, you will continue to pay your mortgage, even if your house is worth half of the mortgage amount.
But homeowners who choose a different path, and who think about their finances strategically, may decide they are far better off handing back the keys to the lender, taking an immediate hit to their credit history and score, and moving forward with their financial lives.
If even a million homeowners make the decision to strategically default, it could change the mortgage industry as we know it.