For people who bought their homes 10-15 years ago, that home may still be worth more than the owner paid for it. If those owners haven't taken the equity-based-on-inflation out of their home in a refi, they are still money ahead. They didn't pay a huge price for the home and they have accumulated some equity.
The real "underwater" owners are those who bought at or near the peak of the housing bubble, and those who refi'ed the bubble-created "value" from their homes and spent it. I suspect most of these are fully aware of their folly.
In any event, an owner can walk away from an underwater home and default on its mortgage. In this circumstance it is unlikely a lending agency will write him another mortgage. He must find another place to live, as a renter, where he only accumulates rent receipts. Given that reality, if he can afford to make his mortgage payments, he may continue to do so, underwater or not.
