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.... more