An article Thursday in the Wall Street Journal confirmed what I've long believed: in hot investment locales (like Arizona) "defaults on mortgages where the owner doesn't live in the house are a major driver" of foreclosures.

That's according to an August study by the Mortgage Bankers Association. Doug Duncan, MBA Chief Economist and Senior Vice President of Research and Business Development, said in a press release that "California, Nevada, Arizona and Florida were among the states with the fastest home price appreciation over the last five years. This rapid price appreciation attracted both speculators and home builders, a volatile combination that lead to an over-supply of homes that was beyond the capacity of the local populations to support. When this over-supply became apparent and prices began to fall, many of these investors simply walked away from their mortgages."

Nationally, non-owner occupied homes accounted for 13 percent of prime defaults and 11 percent of subprime defaults. In Arizona, they accounted for 26 percent of prime defaults and 18 percent of subprime defaults.

Ranking among the top 10 states in foreclosure rates, Arizona had a real estate boom that was driven in part by speculating investors. In the Metro Phoenix area, low prices in new communities on the outskirts enticed investors - even ordinary folks like you and me - to buy multiple properties. Even if they couldn't find renters, investors who got in early were able to flip their properties for a handsome profit.

But investors who held on, or bought at the peak, are finding themselves in trouble now. There's not much of a renter's market in communities on the outskirts of the Metro area, and even if investors could find renters, they'd have a hard time charging enough in rent to cover the mortgage, HOA fees, property taxes, and other home ownership costs. And that's not even counting rising mortgage payments when adjustable-rate and interest-only mortgages adjust.

For families who can stick out the housing downturn (and can continue to afford their mortgage payments) their investment will pay off in the long run. But for those compelled to sell now, the downturn in the housing market, coupled with the fact that many builders are still building new homes, will make selling hard to do (without the right real estate agent, of course).

So what's an investor to do? Many are resorting to just walking away - leaving the property to fall into foreclosure.

But that option has its downsides, not least of which is a huge blemish on the investor's credit record. One investor profiled in the Wall Street Journal article saw his credit rating drop from 730 to the high 400s when he foreclosed on his investment properties.

Some are looking to bankruptcy as an option, but that also has hugely negative credit record ramifications (a bankruptcy stays on a person's credit record for ten years). Bankruptcy also puts a person's assets (including primary residence) in jeopardy.

My advice for investors left holding properties that haven't appreciated and mortgages that have or will adjust to much higher payments: tough it out. Read up on the ways that you can avoid foreclosure (in my October 8th blog, What's behind the foreclosure crisis - and what you can do about it). Or hire an expert real estate agent who can help you sell your investment properties (it is possible to sell now - and get a good price).