"Intentional Foreclosure":

CBS News:

For Karen Traynor, buying a condo closer to her job in San Francisco seemed like a sound financial decision. But in the last year, this home seemed to drop in value by the day - forcing Traynor to make a much more devastating decision, CBS News correspondent Sandra Hughes reports.

“It would be an intentional foreclosure,” Traynor said.

Her adjustable-rate mortgage will be reset in June. And although she can afford the $900 increase in payments, she doesn’t think it makes financial sense. “I am not doing anything illegal. I am not scamming anybody,” she said.

When real estate was booming, Traynor bought her 2-bedroom condo for $505,000 after it appraised for $520,000. Although she took out a 100 percent loan, she figured she had some equity. Now, she would be lucky to unload her property for $340,000. That’s a $165,000 loss.

“‘Everything is negotiable in business,” Traynor said. “And so this is just another business decision. I just don’t see why this is anything different.”

Someone who can afford to pay her 100% mortgage simply walking away from it to avoid a six-figure loss? At the height of the housing boom in '04-'05, who would have predicted such things?