> The tax rate is 4.5-5% of value. In California its 1%.

Oh really? Then Santa Clara county owes me a bunch of money. (And no, this isn't a "my house lost value" issue. My property taxes went up last year, just like they did the year before, and the year before that.)

CA does have "non recourse" purchase mortgages. That means that the bank that loaned you the money that you use to buy a house can't come after you after foreclosure if they can't recover what you owe.

Note that I wrote "the money that you use to buy" - if you refinance, that bank can come after you for any money that they can't recover in foreclosure.