If you are already late on your mortgage, good luck trying to buy a new home because it's simply not going to happen. That is, of course, unless you decide to go rogue and use a straw buyer, which can have some serious consequences. However, a new trend has emerged in the dusty landscape that is out current housing market. People currently in good standing on their mortgage, but are in a negative equity situation, buy a new home at the current deflated home price and simply walk away from their current home and let it go into foreclosure. Below is a blurb from a Time Magazine article featuring an interview with a Las Vegas Realtor, consulting people on doing this very thing. 

 Boemio specializes in short selling, in a particularly Vegas way. Basically, she finds clients who owe more on their house than the house is worth (and that's about 60% of homeowners in Las Vegas) and sells them a new house similar to the one they've been living in at half the price they paid for their old house. Then she tells them to stop paying the mortgage on their old place until the bank becomes so fed up that it's willing to let the owner sell the house at a huge loss rather than dragging everyone through foreclosure. Since that takes about nine months, many of the owners even rent out their old house in the interim, pocketing a profit.

Before you plan on following the above short sale example, know that there are potential consequences. The first obvious consequence is that walking away from your home will destroy your credit. With companies now doing credit checks on applicants, having a foreclosure on your credit report can result in more than just making it difficult to get credit. Secondly, in some states, lenders can sue for assets, including a new house or even file fraud charges against the borrower.

So again, before you attempt to buy a home, simply because you are unhappy with the result of your investment, understand the consequences before you leap.