>> People keep saying this, but the only time they can come up with examples are when the owner wants out of the property. In the case of a home loan, being underwater is meaningless if you're not going anywhere. Most people will continue to pay because they need a place to live. I have yet to hear of someone who was underwater on their primary home loan and decided to stop paying it and default just because. For an investment property I could see that happening. For the house that you plan to live in for the next 20 years? No.

Only if you have a real choice. Reasons people will default:

- Divorced, force seller; especially common as finances go downhill

- floating rate on 2nd mortgage/HELOC is no longer affordable

- Lost job, have no money to pay mortgage. defaults

- Job change with lower income. Have money, but not enough to keep up with payments

- property taxes re-assessed, no longer affordable. tax liens pile up on home