Really tough question. Much depends on your finances, tax situation and your financial goals. You need to contact a CPA and or an attorney. At least the CPA to discuss options. There are many thiings to weigh out. For instance, if you short sell now there will be no federal or state inbcome tax on the amount that is shorted to the bank but your credit rating will take a large hit.
The minimum, if it isn't covering the full interest charge is being added to the principal and there will come a point where the lender will no longer accept a minimum payment.
If you don't have a CPA then contact the California Credit Counseling Service of SF they can give you options better than anyy Realtor.
All we can do is sell the property for you and work with the bank to get them to accept the price. If you can hold on to it hold it. The value will return. If you are going to hold it try to get a stable loan.

Wed Jun 4 2008, 19:53

There are a number of short sale and REO properties on the market now in the 94134 area, which will be your competition for buyers should you put your home on the market. A bank will require you to fill out a hardship package detailing what circumstances -- loss of job, health issue, etc -- precipitates the reason for a short sale and your inability to pay the mortgage going forward. A short sale will also have some impact on your credit score, although not as much as a foreclosure.

My crystal ball is a little foggy, but I don't feel I'm going out on a limb to say that home values won't be increasing by 30% over the next year or two.

Wed Jun 4 2008, 15:30

Dear Carrie,

If you can afford it, keep it. All the economic forecasts I have been to recently predict a change coming soon. I hope you are not distressed and like living where you are. This is a down time but things will change. I wish you all the best.

Tanja Beck

Wed Jun 4 2008, 14:50