HARP, HAMP, HAFA and regular short sales, as well as Deed in Lieu of foreclosure, with foreclosure being the worst.
You can start by finding out all of the options available to you. You can call your lender, explain that you are in financial hardship situation, and find out about some of the options available to you.
Many attorneys do free consults. HUD has counseling services that are free...
There are realtors who have been trained to work with homeowners like yourself, who find themselves in in pre-foreclosure situation.
You can refinance, do loan modification, do a HAFA short sale, regular short sale of Deed in Lieu (if worst comes to worst)...In some short sales, lenders pay your taxes.
In other cases, lenders will pay the seller to do the short sale (if qualified).
Whatever you decide to do, you'll probably be better off if you do it right away - starting from contacting an experienced CDPE agent (Certified Distressed Property Expert) in your area (you can find one on CDPE website).
Based on what you are saying, new HARP program might be the one for you (and they won't own your house).
Hope this helps,
Irina Karan, CDPE
Beachfront Realty, Inc.
Ron and Debbie