I know you're just gathering opinions, but on something like this, the best advice is to make an appointment and sit down with a lawyer to discuss the financial implications of your decisions. You may or may not have to file bankruptcy. That's something you should know before you spend a lot of money trying to save something that can't be saved.... more
Some good answers here, but let me tell you what the REAL difference is between a short sale and Foreclosure (REO).
In both types of sales, it's ultimately up to the bank (servicer, investor) to decide if they will take the offer. In the short sale situation, the motivation seems to be quite a bit lower. Why is that? I believe it's because when it's a short sale, the current owners are paying all the bills. Utilities, insurance, property taxes, all the costs associated with owning a property. When it becomes property of the bank as an REO, they suddenly start having to paying the holding costs.
Investors REALLY don't like this. It's one thing to not get paid back on money you've loaned, it's quite another to suddenly get hit with bills stemming from that loan! They want to sell it as quickly as possible and they will be much more aggressive on value.... more