Have you spoke with your lenders on your first and second mortgage about doing a loan modification on both(ask to speak to loss mitigation)? Yes, a short sale is an option, but I'm going to assume you would prefer to keep your home, so this is an option to explore. Not everyone has had the same success story, but there are plenty of them out there. Financing and law are not my area of expertise, so I recommend speaking to someone better qualified than just my opinion. I have also seen people file I believe chapter 13 bankruptcy and have their second mortgage 'stripped' depending upon the current market value of their home ect. You have many different avenues to explore if you want to keep your home. Don't delay though, time is of the essence! Best wishes to you.