There are solutions to avoid letting your house fall into foreclosure.

Olick- Drowning in negative equity?

"If you have no desire or need to sell your home, then falling
home prices are just on paper and likely temporary, right?
Depends on how you look at it.  Falling home prices put more
borrowers in a negative equity position, that is owing more on
their mortgage(s) than their homes are worth. We call that
'underwater,' and for good reason, because for some borrowers
that sense of drowning in debt has profound implications.

Today Zillow.com reported a new high in negative equity: 28.4% of
single family homes with a mortgage (remember, 32% of all
homeowners do not have a mortgage).  That's a national average,
but the numbers are far worse in some of the nation's big metros.
Atlanta, for example, has a 55.7% negative equity rate. Denver,
41%, Chicago nearly 46%. This is on top of all the foreclosure
hot spots like Phoenix, where close to three quarters of all
borrowers are underwater.

'Higher rates of negative equity are creating a lot of latent
vulnerability in the housing stock, where if the household then
encounters some economic shock, like the loss of a job or divorce
or death, then that household is much, much more likely to go
into foreclosure,' notes Zillow's Stan Humphries. 'So it just
means that higher rates of negative equity, we’re going to see
elevated rates of foreclosure for the next two to three years.'
But higher rates of foreclosure put increasing pressure on home
prices, causing them to fall further, which in turn puts even
more borrowers underwater.

One begets the other begets the other. Humphries thinks this is a
bigger deal than the 'walkaway' issue (or strategic default);
that's where borrowers see no chance of ever having equity in
their homes, so they walk away rather than becoming permanent
pseudo-renters, responsible for the high cost of the home's
upkeep but reaping no equity benefit.  'The best research
that’s been done right now seems to suggest that negative
equity impact on strategic defaults really kicks in at very high
rates of value to loan ratio, so that means when people are more
like 30-40% underwater does it start to create proactive behavior
where they want to walk away from the mortgage. And even at those
rates of loan to values, you’re still seeing strategic defaults
be a relative…not a majority behavior,' says Humphries.

Well there are certainly plenty of large metro markets, as I
cited previously, where negative equity is that high. And here's
a little more food for thought: What about mobility? As the
economy improves, and we see those jobs numbers rise, as we did
last Friday, we have to consider the fact that many people taking
these jobs may be required to move for said jobs. Those same
borrowers may not be able to take the loss on the home that's
required to sell it. What then?  What is the fate of the nation's
credit quality. It's already tough enough to get a good mortgage
when you have good credit. Home buyer confidence and demand are
the only remedies right now for the housing/foreclosure crisis.
Sadly, we have neither."