Sorry to hear things are not working out.
Have you tried for a loan modification, I know just calling the bank is difficult but saving your home should be your first line of defense with a short sale attempt if all else falls, short sale has foreclosure type ramifications so do not let people tell you that is your only option.
As I stated above dealing with the bank will be difficult but you need to be persistent call call call, if the rep can not help you ask for a supervisor and then an administrator. Document everything because that is a line of defense you can use to get the court to reopen your case and get the judge to force mediation, yes judges do not like when banks do not try to work things out during these trying times.
As far as the HOA they come behind the mortgage and taxes as others have stated call them remind them of that and tell them to be patient becuase you are trying to work things out with the bank. They will want to lien the property to protect their interest so do not let that alarm you.
Here are some of the ramification foreclosure or short sale will cause and there are many more like your job, yes employers are checking credit records these days.
Your credit score to be reduced by 200-300 points, and short sale a little less 100-200points.
A foreclosure stays on your credit report for 10 years , as does a short sale but the short sale is less intrusive.
After you have gone thru foreclosure, short sale or deed-in-lieu-of there will be what is known as the "waiting period", this period of time varies for each and can be reduced if you had some type of extenuating circumstances that caused the foreclosure:
Waiting Period to Buy After Foreclosure
* Buying After a Foreclosure
The waiting period is 5 years up to 7 years.
* Buying After a Foreclosure With Extenuating Circumstances
The waiting period is 3 years up to 7 years.
* Buying After After a Deed-in-Lieu of Foreclosure
The waiting period is 4 years up to 7 years.
* Buying After a Deed-in-Lieu of Foreclosure With Extenuating Circumstances
The waiting period is 2 years up to 7 years.
* Buying After a Short Sale
The waiting period is 2 years. However, if a seller does not have a 60-day late pay, that seller may immediately buy another home. It's a reason to stay current on your payments while the home is on the market as a short sale.
In addition to the waiting period, some loans require 10% down and a minimum FICO score. The home you purchase must be your principal place of residence, not a rental nor a vacation home.
Lastly most loan applications will ask the dreaded question "Have you ever been foreclosed on?" this states with you for life, many think that because it will not show up on the credit report after 10 years they can answer "no", well lying on a loan application is a felony the caries a major jail term so be aware.