" I bought a modest $125,000 house, even though I gross about $90K a year. Why? Because I didn't want to get in over my head, and I'm not." You are much like me. I bought a $160K home (now worth $300K), make just over $100K/yr, and drive an old 1996 truck. I sleep a lot easier knowing that I am not living on the edge of financial disaster.
No doubt your $300K home is more likely saleable at about $89,000 on the current model, and if everybody else in your neighborhood gets tossed on the street through foreclosure, it'll be worth about $45,000.
You'll walk away from your mortgage.