Walking away from a mortgage you can still afford to pay has consequences; everyone knows that. Your credit score is shot and it can be impossible to get credit.  Some homeowners, no doubt, believe that the credit score hit is worth getting out from a deeply underwater mortgage.

After default, they reason, they can raise their FICO scores by paying all their bills on time and eventually finance another home purchase.

Don’t count on it.

While homeowners who default due to economic hardship, such as a job loss or divorce, normally must wait two to five years before buying a home again, walkaways may face double that time.  “It could be well over seven or eight years before [walkaways] are able to obtain a mortgage to buy a home again,” said Jay Brinkmann, chief economist for the Mortgage Bankers Association. “Credit scores are only one component of a complete credit decision,” he said. “[In these cases] credit scores are not a good indicator of their willingness to continue to pay their mortgage.”

Strategic defaulters might also be charged higher interest rates, even above the levels other borrowers with similar credit scores would receive.

Source: CNNMoney.com, Les Christie, (05/28/2010)