Lesley, I am very sorry for your situation.
Frankly I am surprised that you have not received advice from your Broker. Rancho Mirage must be a similar market, no?
If you really wan to keep it and are not broke, then asking for a loan modification would be the best option. They will want you to re-qualify for that new loan.
If you really think that you can prove a hardship, then they might let you do a short sale, however you need a Realtor that has experience with short sales. I can refer you to one if you need help, a top Realtor in San Diego.
The kicker is that you need to qualify and based on your post it sounds to me as though you are not "broke enough", so that leaves you with the loan modification or foreclosure.
Let me know if you need help.