Absurdly basic question #1

[William MacBride]

Hi. Trying to get some very fundamental stuff answered and clarified.

example 1:
Homeowner Scott Spivey took out a mortgage for 200 grand and bought a house. He paid 10,000 dollars on it and then lost his job. He can't pay any more. The bank begins sending him letters saying they're going to foreclose. Scott will have to leave and the bank will auction the house off so they can get some of their money back.

1. absurdly basic question:
I realize this represents a number of opportunities for investors, but first I need to know simply: Why can't Scott Spivey just say - "ok fair enough. I can't pay. I'll move out and get a cheap apartment. that'll be that." If he leaves and gives them the title, he doesn't own the house any more. He doesn't owe them much more money (just, I'm assuming, the difference between the original loan minus the amount of equity, and the price they get for it at auction. Or would he even owe this?). This isn't optimal I guess, since he doesn't want to owe ANY money, but it doesn't seem so terribly bad. He pretty much just moves out and that's the end of it.
What is the MAIN reason that a foreclosure is so undesireable to a homeowner? Is it because he doesn't want it on his credit record? is it because he'll still owe the bank the difference I mentioned above? Or is it some other factor I'm misunderstanding? I need to get this really clear because it seems to me the whole process (especially in the sub prime mortgage housing crash conditions of our current times) starts here - with somebody who doesn't want to go into foreclosure and is thus ready to make all kinds of deals.
That's enough to start with I'll ask more absurdly basic questions in subsequent posts.

Thanks a lot,
Will