Legal Question in Real Estate Law in California

Probably more a question for a financial advisor rather than a lawyer. As a legal matter, I can't quite say it's "perfectly legal" to walk away from a mortgage -- but it's not one of those going-to-jail kind of illegalities, either. It falls into the area of breach of contract, is sufficiently commonplace that there are substantial rules and practices governing the consequences, and lots of good folks are finding it the preferable exit strategy. The main consequences will be foreclosure and loss of the home, and many years of besmirched credit rating. However, many are finding it worth while. I'd recommend studying your local real-estate market, preferably with the assistance of a broker, to get a better idea of what your property is worth today and what the trend looks like for getting back "in the black." Then, seek personal financial advice.

I would add that a key question is whether you have any equity in the house. A "strategic default" only makes sense if e property is worth less than you owe on it. If you can sell it for more than you owe, even by low-balling the price to get a quick sale if need be, you are far better off selling than defaulting in a LOT of ways. If you owe more than you can get for the house, though, then you are probably right that there is no reason to continue making payments.

Keep in mind that if you do default and the bank forecloses, it is going to affect your credit.

No attorney will ever give you specific advise to default on a contract or do anything else 'wrong'. But, if you are going to lose the home to foreclosure sooner or later, I can tell you from experience that people who are in your situation frequently stop making payments, carefully save that money that would have been paid, and expect it might be a year or more before any actual foreclosure related proceeding would begin. Defaulting will certainly affect your credit, but so will foreclosure, and so will a short sale if you could arrange one. Talk to an experienced local real estate broker about short sale to learn the realities. However, do not fall victim to 'save your credit' sales pitches on radio and TV. Be very careful about paying anyone money to help you, since most such 'plans' are questionable if not illegal.