Mortgage defaults aren't just for homeowners who can no longer make payments. Especially in states like California, where thousands of mortgages are underwater, even those who can still make payments are opting to opt out.

This decision is referred to as a "strategic mortgage default." For these individuals, the amount owed simply outweighs the benefit of keeping the home. While putting your mortgage payment into default is not a simple decision, and shouldn't be an easy one, sometimes it is the best option given the circumstances.

Then again, sometimes it isn't.

It is very important that any individual or couple considering a strategic default carefully consider their situation and the ramifications of such an action.

A recent article in USA Today laid out some of the more common negative consequences of a strategic mortgage default. The first question to ask yourself is whether or not your state allows deficiency judgments.

If your state does, then your lender will be able to sue you for the difference between what you still owe on the house, including any foreclosure costs, and the property's fair market value. So, say you owe a total of $300,000 on your home and the fair market value is $140,000. In some states, your lender could sue you for $160,000.

In such cases, many homeowners choose to file for bankruptcy in order to wipe out a deficiency.

Luckily for homeowners in San Diego, California has non-deficiency laws that prevent lenders from suing homeowners that have defaulted on payment. However, this only applies to the first loan. If you have a second mortgage on your home, your lender can file a deficiency judgment against you - even in California.

Another thing to consider is the effect of a mortgage default on your credit. Defaulting can leave your credit in disrepair. Unless you are on top of all your other payments, defaulting can leave a mark that lasts for many years. This is worth taking a look at, especially if you plan to purchase another home in the future.

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