You can always check with your lender, but in general, if you can afford to make the payments, even though the value has dropped, they have no incentive to do a loan modification. Your next move may be to stop making payments to force the issue, but as Tony said, you then will be affecting your credit scores.

There are many people I know in this catch-22. If you like where you live and can ride it out for a few years, prices will come back and go even higher. We just don't have the magic answer of "when".

Hi Marley
All you can do is approach them about it. Quite honestly, most lenders right now have their hands full and have bigger fish to fry than someone "threatening" to walk away. You most likely will not get a response until your threats turn to actions. But if you do that then be aware you'd be ruining your credit and wouldnt be able to buy another home for at least a few years.

You mentioned the home value has dropped 40%, but do you still have some equity in it or is it underwater? If you still have equity in it then the lender will gladly let you walk away and they will keep your equity.

I don't know your circumstances, but the tone of your question makes it sound like you're just bitter you made a bad investment or bought at the wrong time and you want your lender to bear the burden rather than you. If you are perfectly capable of making your payments, then you have a legal and moral obligation to live up to your agreement. If you decide not to then just educate yourself on the consequences.

Best of luck