First and foremost, you need to speak with your current lender and ask them to modify the terms of your loan due to your hardship. They will either say yes or no. If you don't qualify for a loan modification, then the next step would be to do a SHORT SALE, where the lender accepts a value less than the amount owe to them.
I have a question for you...do you have just one mortgage on this home? If so, then the lender will not be able to take any further action against you for this deficiency. California is a single action state. The most important advice I can give you is to AVOID any sort of foreclosure and either do a short sale or do a loan modification (loan workout) with your lender.
If you have any other questions, please contact me at 310-890-3271, I am a very experienced real estate professional who has successfully helped both buyers and sellers negotiate short sales over the past 18 months with the lender.