Many homeowners who are “underwater” on their mortgage (owe more on the note than the value of the property) or simply cannot pay the mortgage note should consider foreclosure but don’t because they are overwhelmed with feelings of shame, guilt and fear.

Whether it’s your worries about destroying your credit or embarrassment about not meeting financial obligations, your decision to foreclose has an emotional side. It is your family’s “home”. These are your “neighbors”. These feelings are real and legitimate; however, understand that they might get in their way of a good business decision.

The majority of foreclosures today involve owners suffering financial troubles triggered by divorce, unemployment or medical catastrophe. In fact, the foreclosure rate in states is most closely aligned with the state’s unemployment rate, according to a report by Brent T. White at the Univserity of Arizona’s James E. Rogers College of Law.

White says only one quarter of foreclosures are initiated for strategic reasons – simply because owning the house has become costlier than reasonable alternatives such as a renting a comparable home.

That is largely because people let fear and shame cloud their judgment, he says. Homeowners are made to feel guilty by the media which portray owners who can afford their home yet walk away as irresponsible and by the government which encourages them to avoid foreclosure at all cost.

“The clear message to American homeowners from nearly all fronts is that one has a moral responsibility to pay one’s mortgage. The message is conveyed not only by political, social, and economic institutions, but by the majority of Americans who believe that voluntarily defaulting on a mortgage is immoral,” writes White in his report Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis.

Meanwhile, the banks providing the mortgages are not encouraged to renegotiate loans and are condoned for placing profit above everything else, says White.

Much of the conventional wisdom on foreclosure is misleading, too, says White.

“There is in fact a huge financial upside to strategic default for seriously underwater homeowners – an upside that is routinely ignored by the media, credit counseling agencies, and other political and economic institutions in ‘informing’ homeowners about the consequences of default,” he writes. “Moreover, the costs of default are not nearly as extreme as these institutions typically misrepresent them to be.”

Even when you view foreclosure as a viable option, determining if it’s the right thing to do is a daunting task, too. You need to consider many factors in calculating the cost of foreclosing versus the cost of maintaining ownership in order to make a sound decision.

While all of this can be challenging, both intellectually and emotionally, and foreclosure is not without cost, White encourages homeowners who are underwater on their mortgages to carefully consider foreclosure – despite their fears.

“In short,” writes White, “the financial costs of foreclosure, while not insignificant, are minimal compared to the financial benefit of strategic default – particularly for seriously underwater homeowners.”