I was wondering if you ended up selling your home or you are still holding on to it. Did you try to do a loan modification? If you want to kep your home, that should be your first option. It is easier to try for a modification on your principal residence rather than an investment property.
If the bank does not agree to a modification that either drops the interest rate down substantially to bring the payment down and/or reduces the loan balance (that one is tough), then you may want to go for a short sale. Keep in mind a short sale will affect your credit.
But if the value has gone down so much that it does not make sense to hold on to it anymore, then you should consider a short sale.
If you want to call me at 925-425-9491, I can answer your questions and see if I can help you. I sell many homes in Castro Valley and I am very familiar with home values in the area.
Keler Williams Realty