There are so many people in your situation that foreclosure will become a standard on credit reports and not looked down upon. In fact, there will probably be a whole new market opening up with recourse-based loans and credit packaged for people with a foreclosure on their credit history.
Once you have digested the fact that the housing market is not likely to turn around anytime soon, there is no reason not to walk. Unless you feel sorry for the poor wittle banky wanky.
