Rap star Chamillionaire admitted to TMZ in June that he simply walked away from a mansion that he owned outside Houston as the market tanked.
"So I just decided to make a business decision, to let it go, give it
back to the bank. I just didn't feel like it was a good business
investment to keep paying that much mortgage for a house that I'm never
If Chamillionaire did that in North Carolina and had consulted an attorney, he would have been advised that strategically defaulting on the mortgage is a poor decision. While the thought is that the foreclosure will eliminate all debts tied to the home, lenders in North Carolina have up to 10 years to sue the former owner over the balance owed and what the home eventually sold for. That's called a Deficiency Judgment.
So in his case where he purchased a home in Houston for $2 million and let's say the home sold as an REO for $1 million and the mortgage balance at time of the foreclosure was a full $2 million (thanks to an interest only loan), he could potentially get sued for a million dollars at any point in the next ten years.
At that point, he will probably declare bankruptcy and hope that laws had not changed at that point to exclude deficiencies from foreclosure.
The moral of the story: Don't be like Chamillionaire: