As unfortunate as it may seem your situation is not in the least uncommon for this day and age. Many home buyers have been and still are going to be going through the same scenario. My first piece of advice, one I think by reading your question you already are doing, is to be extremely realistic. Assuming that you still owe a very large amount on that $400,000 note and comparables are selling for almost half of that amount, you may be a perfect candidate for a loan modification or a short sale. Many banks are starting to get realistic themselves in trying to help home owners keep their homes in times of duress and more modifications are being approved all the time. More short sales are closing escrow as well.
When we do short sale listings in my office, we do a complete financial analysis on our clients to see if they would be a better fit for a modification or a short sale, not to mention our clients wants and needs in regards to their home ownership future. Bottom line, I would decide in all certainty which route you want to take; 1.) Modification - keep the home and hopefully lower payments and loan balance or 2.) Short sale - Sell the home and be free of the debt with a large (but not HUGE) hit to your credit. If you've been thinking about a short sale, just know that they can be a little complicated and potentially time consuming. There needs to be extenuating circumstances for a bank to approve the sale. These can be things like losing a job, less income, major medical issues, etc. Just not wanting to pay is typically not a good enough reason.
Hope that helps, feel free to let me know if you have any more questions. And good luck! There are ways out of your situation!