Most people are lost when confronted with loosing their home.  You hear about mortgage modifications and unless you take some steps, a renegotiated loan could be a worse situation that a foreclosed property.  Obviously there are no guarantees but chances are, there are ways to stop this or at least delay the process. 

Most people in this situation just figure they made the loan, couldn't pay it so getting rid of it is the best thing to do.  Agreed.  For example, you borrowed $350,000 for you house that is now worth $200,00 and eventually, it sells for about that.  Aside from now having bad credit (the least of your worries), the lender now has two choices.  The can charge the loan off as a loss and issue a 1099 to you (which will not help your tax situation) or, for now, they will do nothing.  But don't believe they are doing nothing.  There are statutes of limitations which give the bank a number of years to decide what to do.  I say in the next several years as people get back on their feet, letters from the bank will start showing up in peoples mailbox..."You know that loan we made for $350,00 and we only got $200,000 for?, we would like to work out a payment plan with you."  So unless filing bankruptcy is part of your strategy, you need to educated in what exactly this bank mess means to you.

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Disclaimer:  This page is opinion and should not be conveyed as legal or professional advice of any kind.  The topics here discussed are of significant importance and the reader should consider obtaining proper representation from those who are proper experts in these fields of discussion.