34,991 New Mexico homeowners owe more on their mortgages than their homes are worth, according to third-quarter 2009 data compiled by First American CoreLogic, a market research firm.

"Millions of U.S. homeowners could save hundreds of thousands of dollars by strategically defaulting on their mortgages. Homeowners should be walking away in droves."—University of Arizona associate law professor Brent T White, in a December 2009 paper

There’s a word for a person who walks away from his financial obligations: deadbeat.

But in the business world, “strategic defaults” are considered smart moves for those facing unpayable debts. Nowhere is this double-standard more striking than in real estate.

The chart below shows that approximately 1 in 10 New Mexico homeowners are, as the saying goes, underwater: Their homes may never be worth what they’re paying for them. That’s a better rate than average, but worse than 16 other states.

In his paper “Underwater and Not Walking Away,” law prof White explains why more people don’t default on home loans, even when it’s in their interest to do so. People tend to exaggerate the blow to their financial futures a default will bring, he concludes.

Andrea Slatopolsky, a financial fitness trainer with Homewise, tells SFR she always advises struggling homeowners to talk to their lenders. But lenders are only so flexible.

As of December, only 239 New Mexico mortgages had been permanently modified to benefit borrowers under the federal Home Affordable Modification Program. The program gave $75 billion to banks so they might give homeowners a break.

Red indicates underwater mortgages. From left to right: Arizona, Colorado, New Mexico (in yellow), Oklahoma.