given your payment to your gross income, you were in over your head from the beginning. for me, this is an integrity gut check. clearly you need to get out from under this burden. to walk away is a last resort imho.

i would instead try and work a short sale, if possible. but in any case, i do not think it is fair to stop making payments and continue to live in the house until you are “forced” out. however ill advised, the bank lent you the funds to purchase the home and you agreed to accept their terms. if you are able to make those payments, you should.

i am not of the opinion that lenders will give those with foreclosure hits on their credit report a pass moving forward. risk is risk.