[onewhippedpuppy]

Originally Posted by tc-sacto

Scenario
House Value $250,000 (assuming neighbors house short sells...Listed at $250,000, most recent short sale closed for $299,000)
Mortgage $460,000
underwater $210,000

No mention of money down, so we can't evaluate that. Also no mention of whether $460k is the original mortgage principal or current principal after down payment and monthly payments. But lets assume $460k is the original mortgage amount with $0 down. If he had put 30% down that would amount to a $138k down payment and the principal would be $322k. So assuming that $250k is the "real" value, he's still $72k upside down. With the more common 20% down the down payment would be $92k, $118k upside down.

Obviously walking on $138k or $92k would be painful, but I'm sure you could still justify walking with a "good money after bad" argument.

It's easy to blast the banks for not assessing a property's "true" value, but you would have needed a psychic for that. Remember that we all have the benefit of hindsight, I don't think most saw the bottom dropping out of the market this quickly or to this degree.