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You know, this situation happens all the time in auto loans. Many people have car loans that exceed the value of their car. And seldom if ever do you hear about them walking away from their car. A car would have no hope of appreciating in value unlike a house. The value of the house could eventually appreciate enough to exceed the outstanding balance of the mortgage. It would probably take some time, but it probably will at some point.
So, let's say this happens thousands of times. Several thousands of times. Individually the home owner is going to be very challenged to get credit for years to come. And I wouldn't be surprised if the mortgage industry wouldn't change as a result. And not changes for the good. Much more severe underwriting standards, increased down payment requirements, etc. There will be a reaction if strategice defaults become widespread.
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