Walk Away warning. Banks may decide to pursue the deficiency in some states.
By the way this wall street journal article is a bit misleading. Lenders are frequently able to sue for the deficiency on second loans in CA. for more info on California anti deficiency laws and Walk Away plans.
Debtor's Dilemma: Pay the Mortgage or Walk Away - WSJ.com: "Banks warn they may get tough with strategic defaulters by pursuing legal claims on a borrower's other assets. 'We will try to reduce people's payments if they have a hardship,' says Thomas Kelly, a spokesman for J.P. Morgan Chase & Co. 'But we have a financial responsibility to get people to pay what they owe if they can afford it.'
Steven Olson, a loan officer and roof installer in Roseville, Minn., defaulted in 2007 on a plot of land in Florida he had bought as an investment. 'I thought I could move on with my life,' he says. But the lender, RBC Bank, a subsidiary of Royal Bank of Canada, sued him, seeking to make him pay more than $400,000 to the bank to cover its losses on the loan. Mr. Olson has hired a Florida lawyer, Roy Oppenheim, to resist the claim. An RBC spokesman declined to comment."