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There are ways to do it legally and in good faith. I had a friend who could make the payments, but was really just wasting money on a bad loan. She went to the bank, turned over the house and got out of the loan. There was quite a bit of paperwork involved, but it was legal and the bank worked with her on the process. She made her payments until she turned over the house.
However, I have several acquaintances (not friends, as my friends wouldn't pull shit like this) who have just stopped paying and pocketed the mortgage payments for a year until forclosure. That situation bugs the hell out of me.
I'm pretty sure that even with a legal strategic default you still get hit with a 1099 for the difference is value between the house and the loan. So aside from the credit hit, there are definite tax penalties.
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