From 2007 to 2009 U.S. house prices plunged and mortgage defaults surged. While ostensibly consistent with widespread “ruthless default,” our analysis of detailed data on home prices and mortgage performance indicates that borrowers do not walk away until they are deeply underwater far deeper than traditional models of ruthless behavior predict. Moral aversion to default may be driving this result since sample borrowers face low default costs along other dimensions. These results suggest that the moral hazard cost of default as a form of social insurance is lower than what many may suspect.