The other day I was reading an interesting article by Liz Pulliam Weston on MSN Money in which she talks about whether or not “underwater” homeowners should simply walk away from their mortgage.

For those of you who have never heard the term “underwater” used in housing, basically it means that a homeowner owes more money on their mortgage than their house or property is worth. For example, if you owe $250,000 on your mortgage but your home is worth only $200,000, you would be “underwater” by $50,000.

Considering how far and how fast real estate prices have fallen in the past three years, it’s easy to see why so many home owners with a mortgage – nearly 25% according to a recent poll – are in a situation like the one described above.

In Weston’s article, she references a paper written by University of Arizona Law professor Brent T. White in which he asserts that if you’re underwater, you should walk away from the home and mortgage, even if you are able to make the monthly payments.

White argues that underwater borrowers would be better off financially over the long-term, not to mention the fact that the current system isn’t exactly set up to provide much help to those who need it.

White also asserts that the morality regarding walking away from a home and mortgage shouldn’t be taken into consideration as this is purely a financial decision.

Weston, on the other hand, argues to not walk away from your obligations, and to try everything possible to make your payments.

She states that aside from the fact most of us believe we have a moral obligation to continue making payments, letting your home slip into foreclosure will ruin your credit score, and will continue to foster the downward spiral in the real estate market that our country is trying so hard to pull out of.

Weston ends her article by recommending that troubled borrowers attempt to work with their lenders and considering all options prior to deciding to simply walk away.

So, in which camp do you fall? Should underwater borrowers walk away from their home and mortgage because it’s better for them financially, or do they have a moral obligation to stick it out regardless of the financial impact? Let me know what you think by leaving a comment below!