To walk away from your mortgage

In the past month I've read the expression "to walk away from your mortgage" quite a few times.

If someone is underwater with their mortgage (i.e. they owe more money to the bank than the house is worth) they might consider walking away from that mortgage.

Is this done literally? Won't the bank be chasing after them? Wouldn't the bank want to recoup its loss from selling the house (which is underwater) from the person that walked away from their mortgage?

Or does the bank hold a legal title of some kind against that person but if it can't find that person (for example if they moved out of state) it can't do much? Or are you under no obligation to pay up if you forfeit the house (and all the past payments?) Or does it differ from state to state?

I guess that your credit/FICO score takes a hit if you walk away from your house, but if if you do it does it mean you are able to start all over again somewhere else (say, another state) or will the bank be chasing you all your life all over the US?

Worded differently: Are you able to just calmly "walk away" and not worry much (about anything other than that credit score) or do you rather have to run away, cover your tracks and hide in the woodwork forever?

I ask because everyone (but me) seems to be familiar with the implications of this particular expression.

In some states of the US ( this may or may not be an accurate list), mortgages by law are non-recourse; the lender can take the property but can't go after the borrower's other assets.

I had heard of being "upside down" with mortages, I hadn't heard of being "underwater" before- new one for me.

I think 'walk away' is a new expression to indicate the person is choosing to allow the bank to foreclose, by voluntarily moving somewhere else - versus the situation where the person is perhaps literally thrown out of the house by bailiffs.

The property title registers that the bank holds the mortgage. If the person stops making payments and disappears, the bank will initiate legal proceedings and if no one disputes their claims, a court will grant the bank full possession so they can try to sell it.

In some places the bank could probably try to sue the person and claim they lost money because of the breach of the mortgage contract but they don't bother because they know they'd never collect enough for it to be worth the legal fees.

The foreclosure will wreck the person's credit score and it could be hard to build it up again but since credit reports only go back a limited number of years, eventually it would be forgotten.

In Britain, we often talk about "hand back the keys" for surrendering an asset secured against a loan if you can no longer pay. It can apply to a vehicle as well as a house. In fact, the term has been used of an entire railway company: GNER "handed back the keys" for its contract to operate the East Coast Main Line, which is now held by National Express.

It is common to talk of a financial option being "underwater", ie, in the case of a call option (option to buy something at a specific price), that means the market price is lower than the exercise price. So it is a small step from there to using it as a slang for negative equity.

Not language-related, but I thought this was interesting. Banks are walking away from foreclosed homes after they've been abandoned and trashed.