Now you might understand why I never recommend a short sale. Short sales hardly ever close and they benefit the realtor more than the homeowner.
If this is not your primary residence, then I would absolutely recommend you try a deed in leau of foreclosure. I'm not so sure how it affects your credit report and it has always been my understanding that it's all about the same no matter what you do. However, I believe that with a deed in Leau of foreclosure the lender cannot come back later and sue for the difference if they accept. If this is your primary residence, I might suggest trying a loan modification.
Both of these methods are very difficult for the homeowner to process with the lender and I suggest you call James Wheeler of Apex Lending for advice. He has been helping homeowners with both Deed in Leau of foreclosures and home modifications. He can also give you some expert advice depending on your circumstances.
James H. Wheeler
Good luck with whatever you choose to do.
Waterside Realty LLC