The recession has caused considerable hardships for countless citizens in the US. With job losses, the real estate crisis, reduced spending and over-extended credit its all contributed to the downfall of many households and businesses. While there’s no denying the tragedy that has come upon on many of our neighbors, there’s a disturbing trend happening across the nation.

There are record numbers of foreclosures all across the country and many of them are justifiable; however, there are also an alarming number of strategic defaults occurring (1 out of 4 foreclosures), and that this is a cause for concern. A strategic default is when a homeowner walks away from their property despite having the financial ability to make the mortgage payments. With the rapid decline in real estate values, it has convinced many homeowners that there’s no point in paying on a mortgage that is much higher than the current value of their home.

There are strong opinions on both sides of the argument. On one side, there are those that believe it is highly unethical to walk away from a mortgage contract when you’re still financially able to make the payments. When you enter into an agreement with a financial institution you have to convince the lender that you have the means to honor the terms of the contract. If the lender agrees, a legal contract is signed and the borrower is now obligated to make the monthly payments. Walking away from a home and dishonoring the contract is a breach of good faith between the lender and the borrower.

On the other side are the proponents of strategic defaults who suggest that a mortgage contract is nothing more than a business deal and if the terms no longer benefit both parties, the deal is broken. The fact of the matter is that its just a business deal and should exclude any moral, emotional, or ethical underpinnings. This group feels that there is a moral obligation to be responsible to family first, and if your family’s situation is compromised, action must be taken. It’s also thought that the banks deserve what they get, as they should be responsible for freely handing out mortgages to less than qualified borrowers; which, ultimately caused the housing bubble and the subsequent bursting of the bubble that caused housing values to fall. Those against strategic default argue that the banks should not be blamed for the bad decisions made by consumers.

Walking away from a home has many consequences that need to be considered before the keys are handed in. First of all your credit rating will take a big hit, up to 200 points in some cases. Secondly, it will be very difficult to obtain credit for a number of years, and if a lender does agree to issue another loan the interest rates will be quite high. Most important of things to consider is that in some states including Florida, is the bank is able to pursue repayment of the defaulted amount either on their own or through a collection agency. Certain jurisdictions allow up to 20 years to recover the outstanding debt.

Does the value of a house make it any more a less a home? If you can still afford the mortgage payments is it worth the stress and grief to uproot your family and move in to a rental property simply because the home’s value has fell. On the other hand, if your house was purchased solely as an investment vehicle and you have no emotional ties to the property, then walking may be the best option for you; just be sure you have considered all of the repercussions that can result from your decision.