Agreed with others, no reason to walk unless you can't afford it. That ish will stay on your credit for a long time and ruin any future loans you might take. I think the whole "walking away from payments" thing was really only for people who couldn't possible afford their mortgage -- those that bought too much house thinking they would sell it when their interest-only 5 year ARM came due, only to find that the market crashed and they were paying 3 times what they could afford for a house worth 70% of what it was when they bought it. They couldn't sell it because they owed more on the loan than what it was worth (upside down), and couldn't afford the recently increased payments.

We bought our house exactly 1 year ago (closed 9/22/10, moved in 9/25/10). We paid $475k (asking was $480k). The house was originally listed at $550k in June of '09, and was off-and-on the market and gradually price-reduced from then until we bought it 1.25 years later. Zillow said $469k when we bought it, it's now at $471k.

However, my wife bought a condo in 2003. 2 bedroom/2 bath. She paid $157,900... but she bought it on some sort of deal with no money down, interest-only payments for the first 5 years, with an ARM that adjusts the rate every 6 months. Her father talked her into it, saying it "couldn't fail." It was a bad move. By the time she started making principal payments in 2008, the housing market had just crashed and she still owed the full $157,900 on a condo that was now worth ~$140k. When we bought our house a year ago, we tried to dump some money into the principal so that we could sell the condo. But the market kept dropping and the condo is now worth ~$125k, so we would take a massive loss on selling it. We've got it rented out right now and are making enough to cover the mortgage plus some extra (it's a pretty good time to be a landlord since nobody is buying and everyone is renting), but it's still a hassle and we would rather sell it and be done with it. If my wife's income hadn't increased significantly between when she bought the condo and when her ARM came due (and she had never met me), she would have been in a serious bind and may have had to walk. She never expected to be in that condo for the 7+ years she was there, and her dad had convinced her that she'd easily be able to sell it for more than she paid any time she wanted to.

TL;DR - don't walk.

Edit -- I don't want to make it sound like I'm bad-mouthing my wife's dad, as he's more than made up for that tactical financial error by being VERY generous with us.