These are the steps I would advise. Of course, I a making the assumption that you have no equity in your home. If you do, then list it for sale and walk away with a few dollars in your pocket. If not then:
1. If your situation has not changed significantly from the time you purchased your home, or obtained the loan that is now getting difficult to pay, then DEFINITELY go to your bank and ask for a loan modification. This will allow you to reduce your payments (and possibly the principal owed on the loan, as some lenders are actually writing loans down to market), stay in your home, and protect your credit from the hit of foreclosure.
2. If your personal situation has deteriorated significantly since you bought your home, or obtained the loan, then you might want to speak with a realtor who specializes in helping distressed sellers and / or short sales. This gives you more control over when you move out. Also, some banks are offering forebearance agreements while the home is being marketed for sale and therefore you will not get the 30 / 60 / 90 day late reporting on your credit or the foreclosure (filing of Notice of Default) filing on your credit. The short sale will be reported, however, we are seeing much less effect on credit scores from a short sale than a foreclosure.
I am happy to discuss your options with you off line (contact me through my profile), as I specialize in working with distressed sellers. I might be able to help you analyze your situation and make an informed choice. Then you can look to finding the right professionals to help you out in your area.
I am committed to helping people find peace of mind even in difficult situations and helping you see all your options so you can Dare to Dream.
Real Estate Consultant
RE/MAX Palos Verdes Realty