I would contact your lender ASAP to open a dialog about helping you facilitate this maneuver. The secret formula I learned many years ago is to advertise: Have free and clear condo (property) plus cash, want to trade for a home in the ____ area.
Make your condo free and clear by working with your current lender to finance the home being traded for. Even if you are underwater on the condo your current lender would be better off with this unorthodox structure. They may need to offer you a portfolio loan or combination of first mortgage and an unsecured note for the difference. Your lender comes out whole and so do you if you find the right opportunity. If you find the right seller it is possible to come out ahead instead of facing foreclosure and all that entails. Hope this is helpful,
Another variation on Jim's and Steve's suggestions is to collaborate with an investor to do an equity swap with seller financing.
A third option--provided you'll have enough cash and your next property will have enough equity--is to ask his lender to do a substitution of collateral for the remainder.
I hate to say it, but many people push short sale over foreclosure because they get paid to do it. There is no commission in a foreclosure. Short sale may result in a promissory note to the lender for the difference and you can ask them for that OR have them forgive the difference. If the latter, foreclosure is the same thing.
So, what can you do? Go to your local county housing department and tell them you have a place to rent for section 8 housing. The government pays rent for those who can't. I bet the others didn't think of that. Get a bank loan for the difference. I have a bank in Vegas that lends up to 250k unsecured if all 3 scores are over 700. Offer an owner financing option to someone with bad credit. Refinance the loan prior to leaving. Obama just removed the ceiling cap on values, meaning it doesn't matter how far upside down you are, you can refinance. Offer half the rental payment that everyone else is offering.
Also, we work with an attorney who is exclusively handling short sales. Contact Amy Williams at the Fryer Law Firm (contact me for phone number is necessary). She can probably help you navigate this in the best possible manner.
As far as I know your lender will not work with you if you sell it, they want all the money once it changes ownership. Do you have a family member who would like to stay in your condo you maybe able to do so without waiting 2-3 years check your bylaws. Before you let your home be forclosed on check to see if a short sale is an option for you.
I don't understand the 2-3 year long waiting list to rent part - why not rent it if there are that many people backed up waiting to rent?
You could talk with the lender to find some ideas, maybe a loan modification could be worked out or deed for keys where you just walk away or sell and bring money to the table to cover the banks loss.
Good luck with it.