He can walk away from the home but not from the mortgage.
He`s on the hook for that `til it gets resolved.
There are several things he can do:
his credit will be ruined permanently.
The bank will foreclose and maybe get a deficiency judgment for anything over the value of the house and sell that the barracudas who will haunt him forever.
(This varies by state,
he`ll need some local legal advice.)
He may be able to find a lender who will lend him enough to pay off the existing mortgage and (by going to a longer term loan)
cut his payments to the point where he can afford them.
Best option if he can find that lender and afford the payments.
You can sell anything if you cut the price far enough.
But he`ll have to come up with the cash somewhere to pay off the mortgage if the house sells for less than the balance.
Tough to do but not impossible if he can get help from friends/family,
cash out a pension or investments or sell stuff like cars,
Sell but cut a deal with the bank to accept partial payment.
There`s a lot of this going on right now and it`s not impossible but he has to talk to the bank to see if something can be worked out.
This is his best option to start with.
This may be his only option if he`s really broke.
It`s not as easy as it once was before the Republicans sold the "reform" act to the credit card industry but it`s still possible and he`ll be out from under with a chance to rebuild his life.
BEWARE of the "Save Your House From Foreclosure" companies.
They are mostly scams and will end up doing him more damage than good.
There aren`t any real "loopholes" and the banks know all the tricks.