Douglas French details the moral qualms some have about walking away from their underwater mortgages:
Scott Dickensheets writes in the Las Vegas Sun of his tossing-and-turning over whether to walk away from his underwater Las Vegas home. The voice of his departed father still convinces him to honor his obligations no matter how bad an economic decision it might be.
However, what troubles the Sun writer most seems to be that he has to make a decision about this at all. “I don’t like the way homeownership, cornerstone of the American dream, kindles this kind of moral quandary,” writes Dickensheets. “This kind of self-re-evaluation.” For many people it is much easier mentally to keep paying, even if it doesn’t make financial sense. “People tend to experience losses even more acutely when they feel responsible for the decision that led to the loss; this sense of responsibility leads to regret,” explains Hersh Shefrin in Beyond Greed and Fear: Understanding Behavioral Finance and the Psychology of Investing.
From a moral perspective, I don’t really see any problem with walking away from it all. Most likely, the loan agreement that you signed stipulates that you must pay a certain amount every month, and if you fail to do so the bank will assume the title to your property. Both sides knew this going in, and both sides understood that the value of the mortgaged property could go up or down.
In essence, then, the bank was willing to accept the property as payment in the event that you fell behind on your payments. In so doing, they also assumed the possibility of the decline in property value. Thus, if you walk away, they will take the house and accept is payment in full for your outstanding debt (unless your specific loan agreement specifies otherwise. Always consult a legal professional before making a decision of this magnitude.)
Thus, there is nothing immoral about walking away from your mortgage. The bank, through the loan agreement, has stated that taking ownership of your property in the event of a default is sufficient as payment. That they were unable to foresee the collapse in housing prices is not your fault, and does not obligate you to make payments, especially when thy have essentially stated that your property will suffice as payment anyway.
So what are you waiting for? Walk away. Just walk away.