First of all, be careful of the answers from people who are not licensed Realtors in Minnesota. The laws in Minnesota are quite different from those in other states and you want to make sure you get good information.
Have you contacted a tax professional or a lawyer? Do you have a hardship? Have you contacted your Lender? How many mortgages do you have? There are many variables that need to be considered.
You should visit the Minnesota Home Ownership Center first. http://www.hocmn.org/en/index.cfm
They have lots of information on loan modifications and other programs that might help.
I don't quite understand why you say, "I am OK with renting although hate the repercussions of foreclosure". Foreclosure and Renting are not related activities. If you decide to rent, you need to make sure that the mortgage, insurance, taxes, and any other legal obligations are kept current (your city may additional fees and/or licensing requirements for landlords).
If you decide to go with a short sale, remember that the Lender must agree to it and this does not mean that you are off the hook. Many homeowners end up having to pay a deficiency judgement after a foreclosure or short sale, depending on circumstances.
In the end, remember it is your responsibility and there is no such thing as "just walking away". There are always consequences.