Depending on whether you wish to stay in your home or sell, there are some options and some hope for you. Although, there are not many success cases nationally, some lenders are working with borrower to modify their mortgages. Nationally, only around 77,000 mortgages have been modified. Lenders have many options when modifying mortgages: interest rate reduction, principle reduction, term extensions etc. All these modifications can help reduce your payments. Your first step is to contact your lender's "Workout Department, or whatever they call it.
If you know for certain that you can not stay in your home, then you have a few options too. You again need to communicate with the lender's Workout Department and inform them that you can not afford to stay in the home. Ask them if they will take a deed-in-lieu of foreclosure. This will affect your credit but not nearly as much as a full foreclosure. You may need to strongly suggest that you can not afford staying in the home..."we will not be making any future mortgage payments". Unless you are leaving the area for ever, DO NOT give up your home or otherwise abandon it. Why pay rent somewhere else, when it could take a year or more for the lender to work something out with you.
The other solution is a short-sale. You will need a real estate agent knowledgeable with the procedure. You again will work with the lender. This time we put your home on the market for the "market value" not what you need to get to pay off the mortgage and the bills.
Let me know if you have subsequent questions on this issue
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