So Sandiego, are you considering this because you are having a hard time keeping up with your finances and aren’t saving for retirement? Or is it because you’re pissed about your lost down payment and your condo losing more value? It seems that if you are struggling, perhaps it’s not a bad idea to walk, the bank certainly isn’t going to pay for your retirement just because you stuck it out. But if you’re doing great financially, what does it really matter? Yes the market is going down, but in the end you really don’t know how this is going to play out.
The moral issue is complicated, it’s really your call. You are the one to have to live with your decisions, no one else. I will say that I totally understand how you feel, we bought last year and have already “lost” our downpayment, it sucks and I do feel pissed on many levels, but the truth is it’s out of everyones control.
If you are considering walking, I would meet with an attorney to verify that you do indeed have nonrecourse loans. BTW, I don’t believe you will have debt forgiveness tax with nonrecourse as some people are saying…you certainly want to check that out to be sure.
Good luck with whatever decision you make, but be mindful that you need to get your emotions out of the decision you make.