Dan is Correct. You can rent out your home legally. No one will come knocking :)
Since you took out the mortgage with the intention to move into the property as your primary residence within 30 days from closing and you lived in the home for X amount of time, you are legally ok to do as you wish.
I do not recommend a "Short Sale". You are correct that you will not be able to purchase again for the next 3-5 years based on current foreclosure rules.
If you need anything else, feel free to contact me anytime.
my website is : http://www.mikede.annie-mac.com
My cell phone is: 201.403.6587
I look forward to helping anyone in need of a Mortgage for a Purchase or a Refinance!
Annie-Mac Home Mortgage