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My first thought is that if you're talking about your primary residence---and especially if you have no other residence---then it isn't the best of ideas to consider that an investment. It should be considered your home. I think a lot of the problem with foreclosures and other financial difficulties is when people look at homes as investments or financial assets. This is why I think HELOCs in principle are a bad idea. People have used them to use their homes as leverage to enter the stock market, and many still made risky bets based on what they were reading in the news or what their friends or kids' pianos teachers were "advising" them on.
Besides that, I don't think defaulting is a question of ethics so much as it is a question of responsibility. You signed an agreement and are bound to the terms of the agreement---period. It would be unethical to somehow defraud the agreement to otherwise avoid the responsibility associated with it.
I've heard the stories of people walking away from houses because of mortgage interest issues. However, defaulting will have an impact on your credit score. So you have to weigh the consequences. Do you want to save money or do you want to maintain a good credit rating, which may help you down the road?
There can be tough decisions. I understand that. But I don't think these are ethical dilemmas generally. If I held a $300,000 mortgage on a $150,000 house, I don't know what I'd do. It's another issue to see your $1,000/month mortgage payment spike to $1,500 or more as well.
I'd have to do a lot of research and figure out where I see things going over the long term. I'd then ask myself, is this an investment or is this my home?
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Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön
Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot
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