To have a lender agree to a short sale you need to be insolvent, meaning you cannot pay your bills. That does not seem to be the case.
You don't mention where you obtained the value "market is $30K less". I would have a Realtor (or talk to two or three) give you an estimatte of Fair Market Value (FMV) and ask for an Estimate of Seller's Net Proceeds" to see what you bottom line is.
You' ll also need a market report showing you real estate trends. Is the market trending up, down , or sideways? Most markets are flat, so that begs the question...how long would we keep it as a rental.
I would talk with a CPA regarding the tax consequences.
For example, let's say it's in great shape now. The home will probably not be treated as nice by a renter, so what would it cost to frix it up for re-sale?
How long witll the market be flat? This could turn into a long endeavor. Is that okay with you? Plus you have this property keeping you both in contact, making deciions, etc.
Divorce is one of the main reasons that homes are sold.
You probably have other assets that are being divided. Do you really want to invest time and energy in renting a home, for who knows how long?
Some lenders will issue a promissory note for the difference , at no interest, for a set length of time. Net that against the other assets, see where you end up.
PS I would vote from trying to reconcile first.
The one component of your wife and you splitting is that you most likely would both prefer to move on with your live's as individuals and not own a joint asset. No lenders will ever want to do a short sale on a performing note. You clearly have a hardship and there is going to be a change in income as you no longer will have the combined income. In all likelihood, the first trust sounds like it will be covered in full if you decided to sell the house. The second trust will probably who takes the entire hit.
It is best to consult and get some legal and financial advise as you weigh your options. Realtors are qualified to give market analysis of homes, but in order to truly know your financial options you should get some advise from a specialist in that field. The link below is for a firm who specialize in negotiating bank short sales.
This is a company that I use that is a free service to my Sellers if they are put in the position where short sale is the best option. You may want to touch base with them and discuss your options if you do not want to hold the home as a rental property. You may or may not be a candidate for a short sale. However they may also be able to help you with a modification if they feel that is an option as well. Regardless, it is best to know all of your options before you make any decisions.
Please feel free to let me know if you have any questions, or to let ATC know where you got their name.
Best of Luck,